Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

Oral Answers to Questions — EMPLOYMENT

School Leavers (Schemes)

Matthew Banks: To ask the Secretary of State for Employment how many people entered a scheme on leaving school in 1992; what was the equivalent figure in 1979; and if she will make a statement.

The Secretary of State for Employment (Mrs. Gillian Shephard): The 270,000 young people starting youth training in 1992–93 all received training. Fewer than a quarter of the 162,000 starting on the youth opportunities programme in 1978–79 received training.

Mr. Banks: I am grateful to my right hon. Friend for that answer. Will she assure me that she will continue to develop training policy to benefit the individual, rather than follow the advice of the Labour party, which is based on the social chapter and a national minimum wage but which would have a devastating consequence for our job prospects?

Mrs. Shephard: No doubt hon. Friend has noted that the number of unemployed young people in Britain is far below the EC average and that the opportunities that we offer under youth training, and in particular under youth credits, which we are extending into his constituency, give young people a very good start.

Mr. Grocott: Does the Secretary of State acknowledge that, in the long history of silly, planted questions, that one must take the prize with additional awards? What matters to school leavers is not the number of training places, so many of which are of dubious value and do not lead to jobs, but the number of jobs and of proper apprenticeships. Will she confirm that they were much more abundant under the Labour Government of the 1970s than now? If she can cast her mind back further to the heady days of the Labour Government of the 1960s, will she confirm that the problem for school leavers was the abundant choice of jobs?

Mrs. Shephard: Young people and others certainly want jobs and want their training to lead to jobs, but it is extraordinary for the hon. Gentleman to assert that Conservative Members do not understand that point when Labour Members, with their support for a national minimum wage and for the provisions of the social chapter and their hostility to employers, never cease to show that they do not understand the point.

Lady Olgaaitland: I congratulate my right hon. Friend on the fact that more than 300,000 young people are now on youth training schemes, and only just over 5,000 youngsters are waiting barely eight weeks to get on to a scheme.

Mrs. Shephard: In the past year, we experienced some problems with young people waiting longer than that. The Department therefore waged an intensive campaign to reduce that waiting time. Thanks to some full and frank discussions that I had with certain training and enterprise councils, we have now reached the figure that my hon. Friend gave, which is a great improvement on earlier figures. I will not rest until we have improved it still further.

Wages

Mrs. Fyfe: To ask the Secretary of State for Employment what representations she has received about companies planning to lower wages when the wages council for their industry has been abolished.

The Minister of State, Department of Employment (Mr. Michael Forsyth): One person has written to me.

Mrs. Fyfe: Is the Minister aware that a considerable number of employers have already cut pay below wages council rates? A laundry worker in my constituency is paid £2·98p an hour and has been threatened with a reduction in his pay. Will the Minister advise the Prime Minister to advise foreign laundry firms to come to Britain and to take British laundry workers to the cleaners?

Mr. Forsyth: The hon. Lady's constituent wrote to my right hon. Friend the Prime Minister and me some time ago about this matter. From memory, I think that he did so in December, when he was advised, if he had a complaint, to approach the wages inspectorate. He has not done so, but I should have thought that that was the proper avenue to pursue the matter.

Mr. John Marshall: Does my hon. Friend agree that the abolition of wages councils will create jobs—[Interruption.]—and is that not better than destroying jobs, which is what a national minimum wage will do?

Mr. Forsyth: My hon. Friend is absolutely right. The Spanish socialists are presiding over twice the level of unemployment that we have because they embraced the minimum wage policy. I do not know what Labour Members are jeering about, because their party will not commit itself to bringing back wages councils after the House has abolished them. When pressed on the matter, it does not know, just as it does not know about a range of other issues—from British Rail, to Maastricht and one member, one vote. It is a party which is making a virtue out of agnosticism.

Mr. Galbraith: Why, in order to retain their jobs, must the low paid take cuts in wages, whereas, in order to retain their jobs, ex-con company directors must take huge salary increases, pension rights and share options?

Mr. Forsyth: We have never argued that the abolition of wages councils would necessarily result in a reduction in wage levels. When the Labour Government abolished 11 wages councils, wages did not go up. When the Conservative Government took people under the age of 21


out of the scope of wages councils, wages went up by two fifths and employment increased considerably among young people.
Labour Members must come to terms with the fact that the European Governments who have embraced their policies are presiding over higher levels of unemployment and fewer jobs in their economies as a result.

Off-the-job Training

Mr. Gerrard: To ask the Secretary of State for Employment what information she has on the extent of off-the-job training in the south-east.

Mr. Michael Forsyth: More than 700,000 employees in London and the south-east have received off-the-job training since last autumn.

Mr. Gerrard: Is it not the case that only three quarters of firms in the south-east are providing off-the-job training for their employees, and that in 1992 it averaged about two days per employee? Is that not a very poor record compared with that of many other European countries? Is it not also the case that the voluntary provision of training is failing, and that we need to require employers to provide appropriate training for their employees?

Mr. Forsyth: The hon. Gentleman is quite wrong. One of the interesting things that have happened is that training has held up despite the difficulties facing firms as a result of the recession. We shall not take any lectures on the importance of training from a party that has consistently opposed employment training and youth training, no doubt at the behest of its trade union paymasters.

Mr. Evennett: May I congratulate my hon. Friend on his determination to increase the number of people taking job-related training? Will he confirm that, in the south-east in particular, manufacturing firms expect to increase their training budgets, or at least to keep them at the same level? Surely that is the way to proceed. Does he agree that we must have more training, and that manufacturing firms in the south-east are proving that they believe in training and are determined to invest in the future?

Mr. Forsyth: I entirely agree with everything that my hon. Friend has said. He is right to emphasise the importance of raising the skill levels in the work force if we are to compete with countries from the Pacific rim, Japan and others, which are the key to prosperity. That is why it is so important that the private sector itself takes the initiative, why we are promoting Investors in People and why we reject the state-imposed regimes which Labour Members favour but which would add to industry's lack of competitiveness in Europe.

Mr. Tony Lloyd: The Minister mentioned the Investors in People programme. Has not it been a dismal failure, although it gives us no satisfaction to say it? Is it not the case that less than a third of the 10,000 whom it was hoped would sign up have done so? Is it not the truth that, despite what the Minister said, during the recession training decreased in the private sector? Have not the Government cut their training budget? Now that we know there is to be a round of public expenditure cuts, will the Minister stand at the Dispatch Box and tell us whether the Department of

Employment will once again sacrifice its training budget and the nation's needs when the Chief Secretary to the Treasury does his work?

Mr. Michael Forsyth: Could we just for once hear an Opposition Front-Bench spokesman welcoming good news for Britain? The Investors In People programme covers 250,000 employees, and many organisations are committing themselves to it. Instead of running down Investors In People, why does not the hon. Gentleman join the Government and everyone else who wishes this country well, and encourage people to take advantage of that excellent scheme?

Job Placement Targets

Mr. Clappison: To ask the Secretary of State for Employment what was the target for job placements by the Employment Service during the most recent three months available; and what was the actual performance.

Mrs. Gillian Shephard: The Employment Service placed 1·42 million unemployed people into work in 1992–93.

Mr. Clappison: Will my right hon. Friend join me in welcoming the fact that the Employment Service has been especially successful in placing the long-term unemployed in work, and the fact that the restart interview scheme has played an important part in that assistance, and also in eliminating benefit fraud?

Mrs. Shephard: The record of the Employment Service at this difficult time has certainly been excellent. Not only has it met its target, but in some cases has exceeded it. The target for the coming year is for the service to place some 1·47 million unemployed people back in work, and I am confident that it will do so. Last year, the Employment Service also placed some one third of a million long-term unemployed people back into work, and that, too, was an excellent achievement.
It is a great shame that Opposition Members sneer at the achievements of the Employment Service and at the excellent staff in our jobcentres. If they, like me, spent more time in our jobcentres seeing what our excellent staff actually do, they might sneer a little less and cheer a little more.

Mr. McAllion: Can the Secretary of State tell the House whether any of those job placements included the recruitment of long-term unemployed people to cross picket lines at Timex in Dundee? Rather than setting the unemployed and the employed at one another's throats, surely the Government's time would be better spent in legislating to provide the same legal protection for workers taking industrial action in this country as is available for workers everywhere else in Europe?

Mrs. Shephard: The hon. Gentleman must know that employees who choose to go on strike have always risked dismissal. I hope that he will join my hon. Friends and myself in condemning the unacceptable violence demon-strated on the picket lines in Dundee.

Mr. David Shaw: Can my right hon. Friend confirm that the success that the Employment Service is delivering is such that virtually every, or even every, unemployed person has the opportunity to attend a restart interview? Is not the Employment Service getting record numbers back into work?

Mrs. Shephard: Certainly the Employment Service has never done a better job in reaching its targets. We also have more opportunities in training, in reskilling and in employment measures—1·6 million in all—than we have ever had to help unemployed people back into jobs.

Employer-provided Training

Mr. Hall: To ask the Secretary of State for Employment what representations she has received on employer-provided training in the north-west.

The Parliamentary Under-Secretary of State for Employment (Mr. Patrick McLoughlin): None.

Mr. Hall: May I draw the Minister's attention to the fact that Normidtec training and enterprise council, which covers my constituency, recently held a special needs awareness week, to try to promote training opportunities for the disabled members of our community? Will he tell the House what steps the Government are taking to ensure that disabled members of the community have access to high-level training and to good jobs?

Mr. McLoughlin: I know about the scheme to which the hon. Gentleman refers. As I understand it, he, too, supports it, and I congratulate him on that. We are encouraging the TECs to identify what is needed locally, and we are giving vast assistance and support, through financial arrangements, to the TEC movement across the country.

Mr. Hawkins: Will my hon. Friend join me in welcoming the fact that 250 organisations, including many household names employing more than 250,000 people, are already recognised as having achieved the standards specified in Investors In People, and the fact that about 3,000 organisations, including many more national and international companies, and many companies in the north-west, are working closely with their local training and enterprise councils on the programme?

Mr. McLoughlin: I can confirm those figures, and I am rather sorry that the Opposition seem to talk them down. Investors In People is important, and a number of household names have now signed up to committing themselves to the programme. As my hon. Friend says, more than 250 organisations have already achieved the target, and more than 3,000 have made a formal commitment to do so.

Youth Employment Initiatives

Mr. Michael: To ask the Secretary of State for Employment what fresh initiatives she plans to take to increase employment opportunities for young people.

Mr. Michael Forsyth: Youth credits are helping increasing numbers of school leavers to acquire the skills businesses need.

Mr. Michael: As one who worked with young people for many years before entering this place, may I ask the Minister whether he accepts that a job and the hope of a job are crucial not only to young people themselves, but to the health of the whole community? Does not the Minister understand that the Government's complacency, reflected in his complacent answer to the question, leads to communities paying a heavy price? Will he give an

undertaking to review the Government's failure in this area and really to tackle the scandal of youth unemployment?

Mr. Forsyth: The hon. Gentleman asked me what new initiatives the Government had taken, and I told him that youth credits were an example of a successful scheme that the Government had introduced. There are no new ideas among Opposition Members, which is why I thought that the hon. Gentleman had asked this question.
I agree, of course, with everything that the hon. Gentleman said about the importance of a job for a young person. Again, I tell him that we shall not take lectures from the party that destroyed the apprenticeship system at the behest of the trade unions. It is the party of the closed shop and of the closed mind, which closed off opportunities for young people.

Mr. Nicholas Winterton: Does my hon. Friend accept that the continuing initiatives being taken through the training and enterprise councils and the fact that employers can have a major input into the TECs are a good way in which to create jobs? Will he pay tribute to the South and East Cheshire TEC which covers my constituency? It has introduced many initiatives and in Macclesfield and the surrounding area, we have among the lowest levels of unemployment among young people.

Mr. Forsyth: I entirely agree with my hon. Friend, and I endorse everything that he says about his local training and enterprise council, which is one of those involved in pushing forward our training credit initiative, which was a manifesto commitment. It enables young people to choose the training that suits their needs, rather than forcing them to take what they are offered. I entirely endorse what my hon. Friend said. I am sure that his close co-operation with the TEC bodes well for youngsters in that part of Great Britain. What a pity that Opposition Members do not take the same constructive approach.

Ms Lynne: Given that unemployment among young disabled people leaving youth training is between 35 and 50 per cent., does the Minister agree that training for young disabled people is woefully inadequate? What initiatives do the Government intend to bring forward?

Mr. Forsyth: I agree with the hon. Lady that we need to do everything possible to help disabled people, young and old alike. The Government have taken a number of initiatives to help to improve the position. I agree with the hon. Lady that it is important to be conscious of that issue, especially when jobs have been thin on the ground as a result of recession. That is very much part of the policy and direction that we have given to TECs and which my right hon. Friend the Secretary of State bears in mind when contracts are decided and the programme is determined for the subsequent year.

Mr. Anthony Coombs: Does my hon. Friend agree that what is crucial, indeed heartening, for the long-term employment prospects of young people is the huge increase in training that has come about over the past eight years? Will he confirm that, over those eight years, the proportion of people leaving school and going into education and training has risen to nearly 75 per cent. against 50 per cent. eight years ago?
The proportion of young people able to go to university is now no less than a third of young people, compared to


only a seventh under the previous Labour Government. Does my hon. Friend agree that both those trends underpin the skills base enormously, which will make the country competitive?

Mr. Forsyth: I entirely agree with my hon. Friend. The Government have done more than any other to create opportunities for youngsters in training, in schools and in further education. Although there are record numbers participating, we are by no means complacent. We want to build on that success, because we want to build a successful country; it is high time that Labour Members stopped simply carping and began helping us to achieve that.

Redundancies, Barnsley

Mr. Illsley: To ask the Secretary of State for Employment how many redundancies have been declared in the Barnsley travel-to-work area from October 1992 to date.

Mr. McLoughlin: Figures for redundancies are not available below those at regional level.

Mr. Illsley: Is the Minister aware that, since 1990, unemployment in my constituency has increased by 44 per cent. and the level of vacancies has decreased by 60 per cent? Since October 1992, when we had the announcement of pit closures, we are likely to see 6,000 further redundancies in mining and related industries—the Houghton and Grimethorpe collieries closed in the past fortnight. It is not time that the Government started creating jobs, instead of throwing money at training and enterprise councils to train people for jobs that are not there? Could we not start by reversing some of the pit closure programme?

Mr. McLoughlin: I draw a number of points from the three questions asked by the hon. Gentleman. He used the base of 1990. If one uses the base of July 1986 for this constituency, unemployment was 6,217. In April 1993, unemployment was 4,329, which is a reduction of more than 30 per cent. I thought that even the hon. Gentleman would have recognised that. We will take no lectures from Labour Members about pit closures—[Interruption.] They may not like it, but they will hear it. Between 1964 and 1970, 277 coal mines closed.

Mr. Dobson: Does the Minister recognise that most of the people in Barnsley who have lost their jobs and been made redundant have benefited under the statutory redundancy scheme? Can he confirm that the Government are considering abolishing that scheme because they regard it as a burden on business?

Mr. McLoughlin: Here we go again—here is another scare story. We will have quite a few of them over the coming weeks. If the hon. Gentleman starts to believe everything that he reads, he will be confused when my right hon. Friend the Chancellor of the Exchequer makes the statement that he intends to make.

Youth Unemployment

Mr. Barry Jones: To ask the Secretary of State for Employment what is her estimate of the number of people aged 25 years and under who are unemployed.

Mrs. Gillian Shephard: 814,742.

Mr. Jones: That is over 800,000, and 41,000 of them are in Wales. They are appalling figures. They represent the ruin of youthful hopes and great unhappiness in families. Will the right hon. Lady admit that it would be wrong for the Government to plan to strip many parts of the north of Wales of development area status, which represents the hope of more work, and give it to south coast towns? That would represent the complacency of her Department.

Mrs. Shephard: The assisted area map is a matter for some of my right hon. Friends and not necessarily for me. But I am sure that the hon. Gentleman would expect me to have input into the drawing up of that map, especially as far as the levels of unemployment are concerned.
In that regard, I am amazed that the hon. Gentleman, who takes a close interest in these matters, has not remarked on the fact that unemployment in Wales has fallen for the past three months, that it is below the national average, that the latest CBI trends survey shows that Wales is leading the country in terms of reported output and orders, and that that survey represents the best possible future for people in Wales, including young people.

Mr. Milligan: Has my right hon. Friend seen the extraordinary figures for youth unemployment in Hampshire, which show that youth unemployment has been steadily falling and is now at its lowest level for three years, which is remarkable in view of the recession? Does she agree that it reflects the good work not only of her Department but of the Hampshire TEC, the Hampshire education department and especially the schools in achieving a higher staying-on rate?
The Weston Park girls school, which I visited last week, has an intake from one of the most deprived parts of the constituency, yet it has increased its staying-on rate from 35 to 80 per cent.

Mrs. Shephard: It is possible that the words of my hon. Friend would have given some comfort to the hon. Member for Alyn and Deeside (Mr. Jones) if he had been listening—which, of course, he was not. There is no question but that a well-trained, well-prepared cohort of young people, as we have in Hampshire, has the best possible chance of finding good jobs.

Ms Eagle: Does the Secretary of State realise that a figure of more than 800,000 youth unemployed is horrific to behold and that many of the young unemployed listening in Wallesey will not recognise the rosy picture that is being painted by the Conservative Government of the reality out there and their chances of getting work? What hope can she offer to the many people under the age of 25 whom I have met since I was elected a year ago who have never worked since they left school and see no prospect of work ahead of them?

Mrs. Shephard: The hon. Lady will know, because I have repeated it often in the House and elsewhere, that I have the utmost sympathy for anyone who faces unemployment. That, of course, includes young people. I hope that she is giving her support to the first-class work of the Employment Service and Merseyside TEC, which is doing sterling work with young people in her area, as well as the other TECs in the north-west. I also hope that she understands that if her party continues to espouse the extraordinary policies that it does, there will be no chance


and no hope whatever for young people or anyone else to look for better prospects in employment under a Labour Government.

Labour Statistics.

Mr. Kynoch: To ask the Secretary of State for Employment what percentage of people in Britain is currently in work, measured as a percentage of the population of working age; and what are the figures for other EC countries.

Mrs. Gillian Shephard: The British percentage in 1992 was 71 per cent. The figures for the other EC countries are in the form of a statistical table. With permission, I shall arrange for it to be printed in the Official Report.

Mr. Kynoch: Does my right hon. Friend agree that we are probably No. 2 in the EC in that table and that that is positive news which should be welcomed—something which the Labour party is incapable of doing? Does she further agree that if the Labour party national policy on a minimum wage were implemented, it would be likely to cost up to 2 million jobs in Britain?

Mrs. Shephard: Britain has the second-highest participation rate in the EC, second only to Denmark. The rate in France, for example, is about 60 per cent. That is directly attributable to the national minimum wage. In Italy, the rate is about 52 per cent.

Mr. Skinner: Is it any wonder that other Common Market countries have marginally better figures of employment than Britain—[HON. MEMBERS: "They have not."]—when one takes into account the fact that the Government import German coal at £110 a tonne and shut British pits which could produce it at £40 a tonne? Is it any wonder that the people out there do not believe a word that the Government say? The only growth industry in Britain is fiddling dole figures and the cost of living figures. It is time that we got rid of them.

Mrs. Shephard: Given that the hon. Gentleman's premise was incorrect, he stands the risk of not being believed. But I am amazed that he has transparently sought yet again, by raising spurious points about the figures, like the rest of his party, to obscure the good news about unemployment coming down for the third month running. Not one Opposition Member has drawn attention to the fact that, for the third month running, we have seen unemployment come down.

Dame Jill Knight: I appreciate that it will be off the cuff, but can my right hon. Friend tell the House how much money the Government are spending in the current year on youth training and youth credits?

Mrs. Shephard: I think that I can manage that off the cuff—about £850 million.

Ms Quin: Will the Secretary of State deal with the fact that No. 1 in the table to which she referred was Denmark and, therefore, the figure cannot possibly have anything to do with levels of employment protection because Denmark has much better employment protection than Britain? Will she also reflect that at a time when the British Government are advertising in Swiss newspapers the low level of British employment protection, unemployment in Switzerland is only 4 per cent?

Mrs. Shephard: I can say to the hon. Gentleman—[Interruption.] I apologise for confusing the hon. Lady with the hon. Member for Holborn and St. Pancras (Mr. Dobson), which is clearly a terrible insult. It is not normally the hon. Lady's practice to talk Britain down, but I am afraid that even she has now fallen prey to this disease which attacks the Labour party. Employers do not need to come here, and they certainly would not if she and her hon. Friends were in power. They come here because we have the lowest business taxation in the industrialised world, sensible labour laws, a flexible job market and a well-trained work force. Regulation does not create jobs.

Sir Donald Thompson: Does my right hon. Friend agree that to keep a high percentage of people in work we need the most flexible possible job market—part time, full time, self-employed, shift workers and the lot? We should not be taking lessons from people who are not as adept at finding work for their citizens as we are.

Mrs. Shephard: We must maintain the upmost flexibility in our labour market. Indeed, the example that we are setting is being looked at with great interest by employers in both France and Germany.

Following is the information:

The latest comparable figures across all EC countries are for spring 1991 and are shown in the following table.


EC country
Persons in employment (of working age1) 1000s
Population of working age1 1000s
Percentage


Denmark
2,601
3,382
76·9


United Kingdom
25,431
36,206
70·2


Germany
28,951
42,205
68·6


Portugal
4,542
6,672
68·1


Netherlands
6,363
10,070
63·2


Luxembourg
161
258
62·4


France
21,593
35,473
60·9


Belgium
3,703
6,455
57·4


Greece
3,471
6,444
53·9


Italy
20,044
38,205
52·5


Ireland
1,102
2,151
51·2


Spain
12,483
24,872
50·2

Source: Eurostat Labour Force Survey Results 1991.

1Working Age is taken to mean up to state pension age which varies between countries.

Training

Mr. Ieuan Wyn Jones: To ask the Secretary of State for Employment what representations she has received on the provision of training for 16 to 19-year-olds.

Mr. Michael Forsyth: The representations I receive from employers and others note the considerable progress made in increasing young people's participation in education and training.

Mr. Jones: Does the Minister accept that we are in danger of failing a whole generation of young people if we do not have a well-planned and well-resourced training programme? Is not it the case that, even today, academic qualifications are valued more highly than vocational qualifications, at a time when the economy needs young people with excellent skills in industry, business, commerce


and science? As general national vocational qualifications in schools have failed, how do the Government intend to tackle this problem?

Mr. Forsyth: I was agreeing with the hon. Gentleman until he made his criticism of GNVQs. I agree with him about the importance of training. I also think that it is important that we get across what these national vocational qualifications are about. They are not well enough understood in the country and it is important that they should be, so that we may deal with the kind of prejudice against vocational training that the hon. Gentleman identifies. So little known are NVQs that they were referred to in The Independent the other day as envy queues—which we tend to associate with Opposition Members. That is why the Government have a major campaign to get across what NVQs are and the importance of vocational training.

Mr. Marlow: The hon. Member for Ynys Môn (Mr. Jones) seemed to be asking my hon. Friend whether he would find some more resources and find some more money. This is often the case from the Opposition parties and it may, in certain circumstances, be justified. But if my hon. Friend is to do that—and even if he is not to do it —can he tell the House where he proposes to make savings in his Department so that we can help to deal with the Government deficit?

Mr. Forsyth: I am surprised at my hon. Friend. He must not fall into the trap of confusing inputs with outputs. My right hon. Friend has been able this year to increase the number of opportunities by nearly 600,000 to 1·6 million for unemployed people by looking at how the resources are used and ensuring that they are used effectively. It is outputs that matter, not inputs.

Mr. Leighton: Was not it the case that the unit price on a year's trading was predicated on the assumption that employers would be fighting each other for young people because of the demographic time bomb and therefore would be making an employers' contribution? He will know that this has not happened and that in many areas of the country there is an acute shortage of employer placements. They are not making their contribution and therefore the unit price in many cases is totally inadequate for quality training.

Mr. Forsyth: I agree with what the hon. Gentleman said about the difficulties of obtaining places, which in part has been a consequence of recession. However, I must give him the same advice as I gave to my hon. Friend the Member for Northampton, North (Mr. Marlow): he must not confuse inputs with outputs. We have seen in the variation of costs of providing trading places around the country that some TECs have been able to do considerably more with given resources than have others. We need to ensure that the practice of the best becomes the practice of them all.

Voluntary Work

Mr. Colin Shepherd: To ask the Secretary of State for Employment what measures she is introducing to encourage voluntary work among the long-term unemployed in the west midlands.

Mr. McLoughlin: My right hon. Friend the Chancellor announced in his Budget the introduction of 60,000 voluntary work opportunities through community action. Of these, 6,570 will be available in the west midlands.

Mr. Shepherd: I thank my hon. Friend for that reply. May I remind him of the significant success of the old community programme, not least in Herefordshire, where a number of people gained employment in secure jobs as a consequence of participating in the scheme and many additional projects were completed? Does he agree that the revised community action, as announced in the Budget, will once again provide the opportunity for long-term unemployed people to become involved in voluntary work and for important projects to be carried out? However, it is important that people are aware that the scheme exists. What measures is my hon. Friend taking to make certain that its existence and benefits are fully understood by the public?

Mr. McLoughlin: I am sure that my hon. Friend is absolutely right. Community action provides a valuable service to the community by those who have been long-term unemployed. It is a scheme which will be administered by the Employment Service and the training enterprise councils, which will do a sufficient amount to ensure that the scheme becomes known.

Mr. Robert Ainsworth: Will the 6,000 people in the west midlands who are allowed to participate in the scheme continue to be registered as unemployed, or will they join the 77,000 people who have appeared on the sickness register in the past three months? Is not it a fact that the 221,000 unemployed people in the west midlands look to the Department to create jobs and training opportunities and not simply opportunities to participate in voluntary work?

Mr. McLoughlin: Again, we see the Opposition decrying any scheme to help unemployed people. Why do the Opposition always complain when unemployment rises and when it falls, too?

Mr. David Evans: Is my hon. Friend aware that not only do we have 500,000 layabouts, but 1 million people who draw benefit are working on the black economy? Has he heard the first cuckoo this year? We cannot ask that lot opposite because they spend every year in cuckoo land.

Mr. McLoughlin: I am grateful to my hon. Friend. I may have heard the first cuckoo the first month that unemployment fell and we have seen that happen on two subsequent months. That is widely welcomed by all Conservative Members and, as usual, widely condemned by the Opposition.

Training Credits

Mr. Graham: To ask the Secretary of State for Employment how many people have taken up training credits.

Mr. Michael Forsyth: A total of 49,000 young people have taken up training credits and every 16 and 17-year-old will have the opportunity to do so in the course of this Parliament, in line with our manifesto commitment.

Mr. Graham: Does the Secretary of State remember when the House was told that every 16 and 17-year-old would be guaranteed a YTS place? Can the Secretary of State reassure the House that the 8,000 young Scots who cannot get a good training place will get one and restore some hope, some income and some future to the young people whom the Conservative party has totally abandoned?

Mr. Forsyth: I should have thought that the hon. Gentleman would welcome the fact that his constituency has been one of the first to benefit from training credits. If he thinks that nothing is being done in his constituency, I will gladly have the pilot carried out in my constituency instead of his. The hon. Gentleman has a real cheek coming to the House and quoting figures that he knows to be wrong when he and his constituency are benefiting from the Government's ideas.

Mr. Bill Walker: Does my hon. Friend agree that training credits will help young people gain the necessary training and experience for the real world? Their problems can be resolved only in that way and certainly not by loud shouting, which seems to be the only answer that the Opposition have.

Mr. Forsyth: I entirely agree with my hon. Friend. Training credits are a way of increasing choxe for youngsters who are seeking training, help and support. The Government have been the party of choice and have continued to extend choice into every area. Choice should be available for the unemployed and it is a great pity that Opposition Members are not prepared to endorse a programme which will be of great benefit to youngsters the length and breadth of Britain.

Unemployment, Merseyside

Mr. Parry: To ask the Secretary of State for Employment what plans she has to reduce the level of unemployment on Merseyside; and if she will make a statement.

Mr. McLoughlin: The overall policy of the Department is to promote a free and flexible labour market that is designed to help to encourage employment in Merseyside, as in all other areas.

Mr. Parry: The Secretary of State will be visiting Liverpool next month. Will she take the opportunity of her visit to meet representatives of the building trade unions and construction employers to see what she can do to help get the industry back to work again, not only in Liverpool but throughout the United Kingdom? Such action is badly needed.

Mr. McLoughlin: I am sure that, if there is time in the Secretary of State's diary, she will consider such a meeting, although I understand that a packed day is already planned. The hon. Gentleman will welcome the fact that the Chancellor went a long way in his autumn statement last year to protect capital projects, an action which vastly helped the building industry.

Oral Answers to Questions — PRIME MINISTER

Engagements

Mr. Mandelson: To ask the Prime Minister if he will list his official engagements for Tuesday 25 May.

The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton): I have been asked to reply.
My right hon. Friend the Prime Minister is attending the unveiling of a memorial statue to Field Marshal Viscount Alanbrooke by Her Majesty the Queen, as is, I understand, the Leader of Her Majesty's Opposition.

Mr. Mandelson: Given that a system of charging for hospital beds would be a tax under which the longer one was ill the more one would have to pay, and given that it would destroy at a stroke the principle of a national health service free at the time of need and point of use, will the right hon. Gentleman give a categorical assurance today that the Government will never force NHS patients to pay charges for NHS beds?

Mr. Newton: I can best point the hon. Gentleman to what was said in our manifesto: that need, not ability to pay, is and will remain the basis on which care is offered to all in the NHS. As my right hon. Friend the Prime Ministers said in an interview in one of this morning's newspapers, we shall honour our pledges both in the spirit and the letter.

Madam Speaker: Mr. Patrick Nicholls.

Mr. Newton: While I am at it, may I just say—[In terruption.]

Madam Speaker: Order. I apologise. I had not appreciated that the Leader of the House had not completed his reply.

Mr. Newton: That is entirely understandable, Madam Speaker. I simply wanted to add that it was good to see the hon. Member for Hartlepool (Mr. Mandelson) back from his triumph in masterminding the loss of Labour's deposit in Newbury.

Mr. Nicholls: To ask the Prime Minister if he will list his official engagements for Tuesday 25 May.

Mr. Newton: I have been asked to reply.
I refer my hon. Friend to the answer I gave some moments ago.

Mr. Nicholls: Now that the Maastricht Bill has received its Third Reading, will my right hon. Friend take this opportunity, and indeed every opportunity, to tell the people of Britain that the Maastricht treaty is a move away from federalism, not a move towards it? It is the Liberal and Labour parties which are self-confessedly federalist and the Conservative party which is not. Is not this a treaty which gives us the opportunity to co-operate with other nation states, to the benefit of this country, which has always been the policy of the Conservative party?

Mr. Newton: My hon. Friend is absolutely right. By enshrining subsidiarity and co-operation between states, the Maastricht treaty will move us to a much less centralised Europe. That is a major achievement and a great gain from the British point of view. As for the Labour party, it has, to my recollection, had seven


different policies on Europe in the time that I have been in the House and the Opposition appeared to be changing their minds again even last week.

Mrs. Beckett: The Lord President quoted the Prime Minister on the manifesto pledges of the Conservative party. Does he recall the pledge not to increase national insurance contributions—broken? Does he recall the pledge to maintain mortgage interest relief—broken? How does he square all that with what the Prime Minister said yesterday?

Mr. Newton: My right hon. Friend made the position absolutely clear in his answer last week, in setting out the Government's intentions to review public expenditure against the background of the pledges that we have made and the need to protect the most vulnerable. If the right hon. Lady disagrees with that, perhaps she would care to tell us whether she is disowning, in his absence, her right hon. and learned Friend's statement that we should be prepared to re-examine everything and that he has not ruled anything out.

Mrs. Beckett: The Leader of the House and his party kept talking about taking tough decisions. When will the Government take the tough decision to admit even the smallest share of the blame for the state to which this country has been reduced—never mind the price the Government are asking the British people to pay?

Mr. Newton: When it comes to talking about the price that the British people must pay, the hon. Lady must count as some kind of expert. I have been looking back at something said by her hon. Friend the Member for Eccles (Miss Lestor) some time ago:
I will not take lessons in Left wing unity from Margaret Beckett. She was the person who went into the 1976 Labour government to implement the cuts over which I had resigned.
[Interruption.]

Madam Speaker: Order. Hon. Members must resume their seats.

Mrs. Beckett: The Lord President knows full well that the Government went into the general election campaign promising tax cuts and public expenditure increases. Is not the most fundamental problem that Britain faces today the fact that it has a Government whose dishonesty is exceeded only by their incompetence?

Mr. Newton: What I know is that the Government are approaching their difficult task in a responsible and considered way and that they are not going to get into the position that led the right hon. Lady into the problem that I have just quoted—the IMF coming here telling the Government what to do.

Mr. Butterfill: Will my right hon. Friend confirm that the Government's priorities in the European Community will, in the foreseeable future, be to secure the entry to the Community of our former partners in the European Free Trade Association, notably the Scandinavian countries and Austria, and to facilitate the arrangements that the Community makes with the countries of eastern and central Europe?

Mr. Newton: My hon. Friend makes a good point. We have a number of important tasks in the Community, including carrying forward the concept of subsidiarity. Among the most important tasks and among those on

which we have made the most gains in recent months is that of enlargement, to embrace exactly the countries to which my hon. Friend refers.

Mr. Ashdown: Can the right hon. Gentleman categorically assure the House that no Government agency was involved in any way in coaching witnesses from Walter Somers before they appeared before the Select Committee looking into the Iraqi gun affair?

Mr. Newton: The right hon. Gentleman well knows that all these matters are the subject of an inquiry by Lord Justice Scott. The most appropriate course for Ministers and other hon. Members is to allow that inquiry to conduct its proceedings properly.

Mr. Duncan Smith: Does my right hon. Friend agree that last week's Audit Commission report on the chronic mismanagement, waste and incompetence of Lambeth council painted a grim picture of Labour in control of councils? Does he further agree that it is a bit rich when the deputy Leader of the Opposition talks about the Government displaying incompetence and dishonesty when Labour has a record like that?

Mr. Newton: I was indeed pretty horrified to hear details of that Audit Commission report on Lambeth council, although not entirely surprised in view of its socialist record of incompetence and waste, which is well known on both sides of the House. It reminded me, once again, of that immortal quote from Tribune last May:
Ineffectual or rotten Labour councils … have been a feature of political life for as long as anyone can remember.

Mr. Gordon Prentice: To ask the Prime Minister if he will list his official engagements for Tuesday 25 May.

Mr. Newton: I have been asked to reply.
I refer the hon. Member to the answer I gave some moments ago.

Mr. Prentice: Is the Lord President aware that the first passenger train that ran in England between Liverpool and Manchester achieved a top speed of 29 mph? That was in 1829. Is not it disgraceful that 164 years ago a train could achieve a higher speed than the train currently running between Nelson and Colne in my constituency? Is the Lord President further aware that I have a letter from the chairman of British Rail which says that the 20 mph speed restriction will be permanent because of cuts in Government funding?

Mr. Newton: Somewhat to my surprise—I had not anticipated that the hon. Gentleman would seek to be so helpful—that seems to be the best argument I have heard for some time for the rapid passage of the Railways Bill, which is before the House today.

Mr. Fabricant: To ask the Prime Minister if he will list his official engagements for Tuesday 25 May.

Mr. Newton: I have been asked to reply.
I refer my hon. Friend to the answer I gave some moments ago.

Mr. Fabricant: Will my right hon. Friend confirm that subsidiarity can be applied retrospectively as well as prospectively and that that means that any European legislation which has been laid before the House and which we have had to rubber stamp since 1986 can—if it meets the subsidiarity test—be either amended or swept aside?

Mr. Newton: My hon. Friend is right. The Commission is reviewing existing European Community law. At the Edinburgh Council it presented some 32 examples of legislation which should be either withdrawn, amended or re-examined, or further proposals that should not be pursued. That review is continuing and a full report is scheduled for the European Council in December this year. It is our intention that those items to which subisidiarity applies should be amended or repealed.

Mr. Sheldon: In regard to the Government's intention to reduce the budget deficit, we have heard from Minister after Minister that nothing is ruled out, yet we have heard nothing about increasing the higher rate of tax. Should not that be ruled in?

Mr. Newton: It is not only from Ministers that we have heard that. As I reminded the right hon. Member for Derby, South (Mrs. Beckett), that is what the Leader of the Opposition is saying, too. That is the sensible way in which to approach these matters and that is the way in which the Government are approaching them.

Overseas Aid

Mr. Luff: To ask the Prime Minister if he will make a statement on the Government's policy on the relative importance of trade and aid in assisting the economic development of the poorest nations.

Mr. Newton: I have been asked to reply.
Worldwide trade liberalisation and measures to encourage the private sector are critical for developing countries, but many countries, particularly the poorest and most vulnerable, will continue to need concessional finance for the foreseeable future. Further debt reduction along the lines of the proposals that my right hon. Friend the Prime Minister made in Trinidad in 1990 will also be required for the poorest, most heavily indebted countries.

Mr. Luff: I thank my right hon. Friend warmly for what he has just said. Does he agree that the major objective of our aid policy should be to encourage the promotion of private sector enterprises in the developing world? In that context, will he pay tribute to the work of the Commonwealth Development Corporation? Does he further agree that we have a fine record as a Government for fighting for free trade, which brings advantages to the developed and the developing world? Can he give an assurance that that fine record will be enhanced at the G7 summit in Tokyo in July this year?

Mr. Newton: Certainly I acknowledge, as I think the whole House would, the leading role that my right hon. Friend and other colleagues have played in advancing the cause of free trade and the successful outcome to the GATT round. My hon. Friend is also right about the part played by the Commonwealth Development Corporation which is the main instrument in our aid programme for the direct promotion of private investment in developing countries. As it happens, United Kingdom direct private investment in developing countries was estimated to be some £3 billion in 1991. That is half the overall total for the whole European Community. It is a record of which we can be proud.

Mr. Worthington: If the Minister is in favour of free trade, when will we abandon the practice of demanding that developing countries drop their import tariffs and when will we stop dumping subsidised CAP food on them?

Mr. Newton: The hon. Gentleman will be aware that the Government have always taken the view that trade is as important as aid in advancing the circumstances of developing countries. I think he will agree that we have a better record than many in promoting those objectives.

Points of Order

Mr. John Morris: On a point of order, Madam Speaker. May I ask whether the Secretary of State for Northern Ireland, in view of the fact that he has made a statement to the press rebutting Sir Hal Miller's evidence to the Scott inquiry, has given any indication that he would wish to make a statement to the House?

Madam Speaker: No. I have not received any indication from any Minister about seeking to make a statement to the House.

The Secretary of State for Northern Ireland (Sir Patrick Mayhew): Further to that point of order, Madam Speaker. It may be of interest to the House to know that I have been invited to take the opportunity to gave oral evidence to Lord Justice Scott's inquiry on Thursday—I believe, on Thursday morning—and I shall gladly avail myself of that opportunity.

Miss Joan Lestor: On a point of order, Madam Speaker. Flattered though I am that the Leader of the House should mention me in dispatches, and that he should remember an incident of 17 years ago when in seven years' time no one will remember him at all, is it in order for the Minister to make reference to another hon. Member without giving notice that he intends to do so? With your indulgence, Madam Speaker, may I reflect that if a few more hon. Gentlemen on the Conservative side resigned because of policies on which they have reneged, the country politically would be much better off?

Madam Speaker: I am sure the hon. Lady is aware that during Question Time it is not necessary to give notice, although it is necessary during a debate. It is a courtesy if the reference is planned.

Mrs. Alice Mahon: On a point of order, Madam Speaker. I wonder if you could help me. Tomorrow Tory-controlled Calderdale intends to support a decision to tag electronically elderly people in elderly persons' homes in Halifax, as the homes are short-staffed and cannot supervise residents properly because of their under-funded budget. It is an unethical and undignified proposal. Has the Secretary of State for Health indicated that she intends to make a statement on Government policy on electronically tagging elderly people and NHS patients because of shortage of staff? In the past that procedure has been reserved for prisoners and people on parole.

Madam Speaker: I have had no indication that the right hon. Lady intends to make any such statement. The hon. Member for Halifax (Mrs. Mahon) will have to seek some other method of raising the matter, in which she is obviously interested.

Sir David Steel: Further to the point of order raised by the right hon. and learned Member for Aberavon (Mr. Morris), Madam Speaker. While it is welcome that the former Attorney-General is to give evidence to the Scott inquiry, it will not have escaped your notice that that coincides with the start of the Whitsun recess. The question is, when will we have answers about the matter in the House?

Madam Speaker: It is for the Government to determine the order of business and not for the Speaker, as the right hon. Gentleman is aware.

Mr. Bruce Grocott: Further to the point of order raised by my hon. Friend the Member for Eccles (Miss Lestor), Madam Speaker. You are quite right to say that, during exchanges, matters arise spontaneously, and hon. Members cannot normally be warned when their names are to be mentioned. However, it was clear during today's exchanges with the Leader of the House—as is common in the case of the Prime Minister—that the right hon. Gentleman did not say anything remotely spontaneous. It was all carefully rehearsed and read out. Given that there was no element of spontaneity, should not the rule that applies to normal debate—that Members ought to be warned when they are to be referred to in a premeditated way—have been applied in this case?

Madam Speaker: I dealt with that matter in my original ruling. It is necessary to give notice when a Member is to be mentioned in the course of a debate. However, as hon. Members know, that is not usually possible at Question Time.

Mr. Jim Cousins: On a point of order, Madam Speaker. Yesterday I raised with your office and with yourself matters relating to Sir Hal Miller's evidence to the Scott inquiry, which seemed to me to be matters for the House.

Madam Speaker: Order. As I have quite a few things to do, I hope that the hon. Gentleman will give me a little time. I have drafted a letter to him. If he gives me a moment, I shall leave the Chair and sign it. I trust that that satisfies him.

Full Employment (Commission)

Mr. Frank Field: I beg to move,
That leave be given to bring in a Bill to make provision for a permanent Commission to assist and advise Parliament on matters relating to the achievement of full employment in Great Britain and Northern Ireland and related matters.
I should like to begin by contrasting the attitude and objectives of the current Prime Minister with those of his predecessor. During the old regime, not only was full employment taken off the agenda for political debate, but the frontier was policed by withering scorn being poured upon people who wished to raise the topic. They were told that they were being cruel to people in the dole queues even to refer to the possibility of full employment. That attitude could not contrast more starkly with the attitude of the current Prime Minister, who has made it clear to the House that he regards full employment as one of the Government's major objectives. This Bill seeks to introduce a means of allowing him to achieve that objective.
Given the horror that unemployment visits on so many of our constituents, I wish to ask why so little of the time of the House of Commons should be spent on this issue. It is a key issue not only to the constituents of Opposition Members but also to those of many Conservative right hon. and hon. Members: Part of the answer must be that thinking about full employment is now such an enormous task that it is easier not to do so.
During the first world war Barbara Wootton noticed that when the telegram arrived to inform her mother that her—Barbara's mother's—son had died, her mother worked herself up into a great state because the telegram got the designation of his office wrong. Each time War Office correspondence arrived, Barbara's mother was similarly upset about the mistake in rank.
When, after six weeks of marriage, Barbara received a telegram saying that her husband had died, she was similarly worked up into a rage because the corner of her telegram was torn. From this experience, Barbara drew the conclusion that when human beings face problems too large for them to cope with, they tend to concentrate on minor matters rather than on the major subject at hand.
Many of our constituents will ask why, having spent so many hours, weeks and months on the Maastricht Bill, we cannot spend time debating ways back to full employment. While I welcome without reservation the figures of the past three months, which denote a fall in the number of registered unemployed, as well as an increase in manufacturing output and an increase in the number of people employed in manufacturing, I have to ask whether this trend, by itself, can take the country back to full employment. I know the answer to that question, as does every right hon. and hon. Member and those of our constituents who are unemployed, for there are identifiable long-term trends in the British economy working against full employment.
From the mid-1960s, with each boom, the number unemployed was higher than at the previous boom. Also, we not only have today a record public sector borrowing requirement, but one that interacts with a record trade deficit. There is an urgent need to reduce the PSBR, but the danger of achieving that by reflating is so to increase the trade deficit that there is a run on our currency. The third force that will prevent the natural establishment of full

employment is that the Maastricht treaty contains convergence terms that, if met, will ensure that our economy is further deflated.
The Bill's aim is to focus attention and political debate on the importance now of achieving full employment. It modestly defines that goal as 3 per cent. unemployment. It acknowledges that, if that goal is to be achieved, thoughts have to be thought that have yet to be thought of, let alone implemented. It would establish a machinery to allow the House and the country to do that.
The Bill's primary aim is to establish a full employment commission that would regularly report to Parliament on trends in this country and world wide that affect this country's chances of moving back to full employment. Also, how do we evaluate the transfer of school to work, and how does that compare with the most effective of our competitors? What can we learn from elsewhere so that best practice in achieving full employment can be implemented? Again, the commission would have a duty to evaluate Government policy.
Why that action? Why the Bill? We know that unemployment is not a warm overcoat that our constituents willingly put on and shuffle around in; it is the greatest evil facing them. That is something to which we must turn our minds if we are to tackle it effectively.
If we cannot be concerned about those of our constituents who are unemployed, I pose another question. Today's newspapers, rightly, pay some attention to the number of children growing up in lone parent households. Many of our constituents, in an attempt not to be driven mad by the thought of not being able to find work, have written off from their daily lives the prospect of ever finding work.
A whole generation of children are now growing up in households in which full-time work has been written out of their lives. If we are concerned about the effect on children whose two parents do not live together, should we not be equally concerned about the devastating effect on children growing up in a household in which no adult member regularly earns enough to look after all or part of the family?
In seeking approval to introduce the Bill, I draw attention to a change of opinion about the need to move towards ways of achieving full employment. Earlier I referred to Barbara Wootton's observations during the first world war. I refer now to the second world war poster that showed a young son or grandson sitting on the knee of his father or grandfather, asking that person what he did when the country was at war. Today, this country is trying to register a need to put full employment back at the top of the political agenda. We will be asked how we reacted to that change in the political debate. I hope that the House will answer not only by passing the motion without opposition but will seek ways of effectively ensuring that the Bill reaches the statute book.

Question put and agreed to.

Bill ordered to be brought in by Mr. Frank Field, Ms Angela Eagle, Mrs. Jane Kennedy, Mr. Malcolm Wicks, Mr. Calum Macdonald and Mr. Charles Kennedy.

FULL EMPLOYMENT (COMMISSION)

Mr. Frank Field accordingly presented a Bill to make provision for a permanent Commission to assist and advise Parliament on matters relating to the achievement of full employment in Great Britain and Northern Ireland


and related matters: And the same was read the First time; and ordered to be read a Second time upon Friday 2 July, and to be printed. [Bill 200.]

Orders of the Day — Railways Bill

As amended (in the Standing Committee), further considered.

[MADAM SPEAKER in the Chair]

[Relevant documents: The First Report from the Transport Committee, The Future of the Railways in the light of the Government's White Paper Proposals: Interim Report: HC (1992–93) 375, and the Second Report from the Transport Committee, The Future of the Railways in the Light of the Government's White Paper Proposals, HC (1992–93) 246, together with Government Observations thereon (Second Special Report, HC (1992–93) 685).]

New clause 12

CONCESSIONARY FARES: RAIL CARDS

'(1) Each franchise agreement shall include such provision as the Franchising Director considers appropriate for the purpose of securing that the franchised services are available at concessionary rates to passengers holding a document obtained from the Board (or such other person as may be specified in the franchise agreement) as a person who—

(a) has attained the age of 60;
(b) has not attained the age of 26 or is undergoing full-time education or training;
(c) is handicapped or disabled; or
(d) is of such other description as may be specified in the franchise agreement.

(2) In subsection (1) above "handicapped" and "disabled" have the same meanings as in Group 14 of Schedule 5 to the Value Added Tax Act 1983.

(3) A franchise agreement shall also include such provision as the Franchising Director considers appropriate for the purpose of enabling persons who wish to be able to travel within the locality where the franchised services are provided using railway and other passenger transport services—

(a) to travel by the franchised services and other such services on the purchase of a single document; or
(b) to travel on all those services at a concessionary fare by means of the purchase of a single document entitling them to a concession on designated services.'. —[Sir Keith Speed.]

Brought up, and read the First time.

Sir Keith Speed: I beg to move, That the clause be read a Second time.
I start be declaring an interest as, for a number of years, I have, through my company, been a consultant to I nterCity.
I add my tribute to our late friend and colleague, Robert Adley, On the morning of 22 April, a couple of days before his fatal illness, we spent several hours in his room in the House thinking about the Bill in the light of the report of the Select Committee and the Bill's Committee stage. If there is any credit to be given for the proposals that I am making, he is entitled to 100 per cent. of it.
The new clause seeks to enshrine in legislation the railcards and discount cards that are available to various groups of our fellow citizens. Whatever the rights or wrongs of the rest of the Bill, there is no question but that this part of it has caused considerable concern. I have received letters from organisations such as Saga Holidays, Age Concern, women's institutes and others who fear that


our senior citizens will lose the opportunities offered by their senior citizens railcards, which enable them to travel at reasonable fares all over the country.
Others could express similar concerns: disabled people in particular, young people and those who use the intermodal railcard in London and many other metropolitan cities, which conveniently allows people to travel by rail, bus or tube.
I have had fruitful and positive discussions with my right hon. Friend the Secretary of State, for which I pay tribute to him. He has made it clear from the outset that our aims are identical: we want to ensure that such cards are preserved. The Bill does not propose that. It is argued that, because such cards are so lucrative, the franchise companies would be stupid to withdraw them. The commercial argument is that those facilities are mainly available at off-peak times and that it is better to get passengers on seats, even if their fare is discounted, because it helps the cash flow and profitability of the railway company or line.
The social advantages, which I have mentioned briefly, are substantial. Britain has much to learn about leisure travel for senior citizens. SNCF in France identified the old-age pension market and has done much to encourage travel around France at discounted rates, to the benefit of its finances. British Rail, in recent years, offered away-days at £1, and the senior citizens' railcard, which entitles pensioners to substantial discounts, and other discount cards are cherished by many hundreds of thousands of older people, disabled people and young people.

Mr. Andrew Bowden: Before my hon. Friend leaves the issue of the needs of pensioners and pensioners railcards, may I ask whether he is aware that less than 10 per cent. of single pensioners who depend mainly on the state pension have a car? If they were deprived of their railcards, that would make it extraordinarily difficult for many of them to visit relations or to travel on trains at all.

Sir Keith Speed: My hon. Friend is right. In a few years' time, I shall be a state retirement pensioner. It is very important for us to consider pensioners' quality of life. Travel enables people to visit their grandchildren or children and visit other parts of the country when they have the available time and leisure and can do so at a reasonable price. A rail journey in itself can be a pleasurable activity for many older or disabled people. My colleagues and I therefore believe that it is vital that the safeguard is incorporated in the Bill so that, beyond peradventure, there is no question of people losing their concessions.
My right hon. Friend the Secretary of State and my hon. Friend the Minister have argued that they will issue directives or instructions to the effect that the cards should remain, but that is not the same as the House expressing a view. If the safeguard is incorporated in legislation, it will mean that, if anyone seeks to withdraw the cards or any concessions, the matter will have to be brought back to the House so that the legislation can be amended; we or future Members of Parliament will then have to vote and be answerable to the electorate.
My right hon. Friend the Secretary of State said earlier —I appreciate the point he makes—that it would be extremely unlikely that any of the franchise operators would withdraw the cards because there would be an

outcry if they did. However, if, for example, the franchisee running trains on the line from Exeter to Paddington decided to withdraw the card—perhaps for cash-flow reasons or merely because of hard-nosed management—half a dozen colleagues representing constituencies up and down the line would cause a fuss, furore and storm. However, if British Rail decided overnight to abolish senior citizens railcards, 650 hon. Members would write to my right hon. Friend—not 651, because my right hon. Friend would not write to himself as he would know what the problems were. Therefore, it is vital to enshrine the safeguard in legislation, and this is perhaps the only opportunity that we shall have for a very long time.
If my right hon. Friend accepts the new clause, not only would it be good to have enshrined the proposal in legislation for the future but the Bill would provide something that does not exist at present. Elderly, disabled or young people or even intermodal card users currently have no statutory right to this concession. People will value such a right in the future, and I hope that more young people and old-age pensioners will use the cards and enjoy them even more.
I trust that the debate will be brief—because my case is so strong, I hope that my right hon. Friend will accept it. The new clause would give fresh opportunities to young, old and disabled people and would ensure that people travelling into towns and cities across the country can use the intermodal cards which are so effective and useful. I commend the new clause to the House.

The Secretary of State for Transport (Mr. John MacGregor): As my hon. Friend the Member for Ashford (Sir K. Speed) said, we entirely agree on the objective. That was clear from our discussions. I fully understand the importance of railcards to senior citizens and other groups. Indeed, my hon. Friend has explained their importance so well that I do not need to repeat what he said. I can only add that many thousands of my constituents benefit from the senior citizens railcard, as do members of my family. I do not think that is a declaration of interest but, if it has to be, then it is. I know of people who are very clear about the benefits of railcards, and I have seen those benefits many times. In due course, I shall join my hon. Friend in becoming a senior citizen, so I have absolutely no wish to see cards disappear, as I have made clear throughout the proceedings on the Bill. Indeed, I believe that under our proposals their scope and scale will be enhanced.
The question is how we can best achieve our objectives. My hon. Friend was right to say that British Rail has no statutory obligations at present, nor has it ever had. There is a feeling among many people that British Rail has a statutory obligation, but it does not. I recognise the social benefits of many of the cards, especially the senior citizens card, but they are also—indeed, in some ways, primarily —marketing incentives, to attract more passengers on to the railway during off-peak periods. That means, as it was somewhat inelegantly put during our discussions, "more bums on seats."
That is obviously a clear incentive for British Rail, and I believe that it would be an even greater incentive for franchisees. The basis of our case has been that franchisees will make their returns and, if they are successful, benefit both themselves and their employees more, in two ways: first, by seeking effective cost savings and by running a cost-effective franchise; and, secondly, by increasing


revenue. Increased revenue will be achieved by attracting more passengers. So the franchisees will have an even greater incentive than British Rail has ever had to seek to exploit in every possible way, through more extensive and imaginative discount schemes, the possibility of filling up the trains, and that is why—

Mr. David Martin: Will my right hon. Friend give way?

Mr. MacGregor: May I finish my sentence first?
That is why I believe profoundly that under our reforms there will be more use of such schemes.

Mr. Martin: Will my right hon. Friend confirm that it is profitable for British Rail to offer senior citizens and young persons railcards, but that the disabled persons initiative, which under his plan will be enshrined in the legislation, is not profitable?

Mr. MacGregor: That is correct, although it is not enshrined in legislation—I shall deal with that later. It is correct to say that in so far as cards attract more passengers there is an obvious revenue benefit. That is why I believe that there is no doubt that franchisees will wish to continue, extend and expand the schemes.

Mr. Bob Cryer: The Secretary of State is completely ignoring the reality that there is a doubt. He says that there is no doubt in his mind that the franchisees will want to use those facilities, but surely the problem is that, with the break-up of a national rail network and the break-up of InterCity, there is a real doubt. If the Secretary of State is so convinced, why does he oppose legislating to assuage the doubt and to give pensioners and future pensioners confidence that there is no possibility of the cards being withdrawn?

Mr. MacGregor: I hope that the hon. Gentleman will allow me to develop my case; I shall come to that question at the logical point in my argument.
There is a reason why the British Rail schemes have not been statutory, and that is the danger of inflexibility. As the House will know, British Rail changes the range and types of schemes over time, and wishes to develop them, as I believe that the franchisees will. There is an obvious risk that, if the conditions of any scheme—the people to whom it should apply, and so on—are made statutory, as British Rail or the franchisees wish to develop their schemes they will have to seek primary legislation every time the original conditions are found to be constricting.
There have been good commercial, marketing and—as one of my hon. Friends remarked from a sedentary position—"businesslike" reasons for wishing to operate more and more schemes. That is why we have said that we have every reason to believe that railcards will expand and prosper under the new reforms, on a non-statutory basis, as now, with co-ordination between operators being achieved by joint industry arrangements.
There has been some outside comment on that point, so I must explain that there is no technical difficulty in such arrangements. British Rail currently operates under 19 profit centres, on which, as I made clear yesterday, the franchise units that we expect will be based. The profit centres now within British Rail have to have a clearing

house to arrange for the allocation of the relevant parts of the revenue to each centre, so there will be no technical difficulty about such arrangements under our reforms.
I now come to the point raised by my hon. Friend the Member for Portsmouth, South (Mr. Martin). We had accepted that the disabled persons railcard was different. It is provided voluntarily by British Rail and it does not make a profit; so there is not so much a marketing advantage or a marketing scheme here as a social benefit. Moreover, it is available for use in peak hours as well as in off-peak hours and is offered in recognition of the special needs of disabled people. We have, therefore, said that the franchising director will require franchisees to provide common discounts for disabled people on broadly similar lines to the present arrangements. We saw no need for that provision to be in the Bill because we had given an undertaking that we would direct the franchising director in his objectives to require such a provision.
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In our discussions, my hon. Friends took the force of the point that under our reforms there is a greater incentive for operators to seek to use railcard and discount schemes and that there is a need to retain flexibility. My hon. Friends made two points in response. The first point—which my hon. Friend the Member for Ashford especially pressed and which he has also raised this afternoon—is that, under the voluntary arrangements, we could not guarantee that there would be a national network. One could not absolutely guarantee that there would be no gaps. My hon. Friend has made the point that there may be one or two franchisees who do not share my view and who may not—this is hypothetical—operate a scheme. In that particular franchise, there would be a gap not only for those who travel there but for those who travel through that franchise.
My hon. Friend the Member for Ashford also made the point that he would prefer the provision to be in the Bill to ensure the continuance of these schemes. I made it clear that one possibility was to require, through directions to the franchising director, that he should do the same in the contracts with franchises for senior citizen railcards, for example, as we have instructed him to do for the disabled. My hon. Friend replied that he had no doubt that I would wish to do that for the entire period that I was Secretary of State for Transport. I can assure him that that is the case. However, he pointed out, and I agree, that these reforms will last for a long time; they may last longer than I will be Secretary of State—one cannot be absolutely sure of any future Secretary of State.
My hon. Friends fully accepted the need to maintain flexibility and saw a positive advantage in that. In return, I accept the force of their two points. I take on board what my hon. Friend the Member for Ashford has said and therefore propose to move as follows. I take on board the points, as we have throughout the course of the Bill. In Committee, my hon. Friend the Minister for Public Transport listened carefully to all the arguments, and where we believe that the case has been made, provided that they are in line with or further our objectives, we are prepared to make changes. The size of the amendment paper reflects that position and that attitude in Committee.
I must tell my hon. Friend the Member for Ashford that I fear that new clause 12 is defective for a number of reasons, through which I have briefly taken him. However, I accept the force of my hon. Friend's arguments.


Therefore, I now give an undertaking to bring forward in another place an amendment to impose a duty on the franchising director to require, through franchise agreements, participation in discount schemes for senior citizens, disabled people and young people. I thank my hon. Friend for the courteous and constructive way in which we have carried out our discussions. He has convinced me that we just needed to go that little bit further to ensure the continuance of such schemes and I gladly confirm that we will do so.

Mr. Brian Wilson: My modest experience has taught me one thing. Tory rebellions are a bit like tooth fairies—"Believe in them when you see them". There is little in the statement by the Secretary of State that should dissuade the Tory Members who tabled the new clause from pursuing it to the vote. I shall explain why. First, let us be clear that we are seeking not to create new rights or benefits, but to defend existing ones which are threatened—an unnecessary by-product of this unwanted Bill. The only people responsible for putting them at risk are the Secretary of State and his colleagues.
We are seeking to safeguard benefits that are appreciated and enjoyed by millions of our constituents, especially the young and the old. The outcome of the debate does not matter, because the Government have distinguised themselves by creating confusion and uncertainty about a feature of daily life that is valued by so many people. Why have they created that uncertainty? It is not an end in itself but a facilitator for the ideological aim of fragmenting and privatising railway services. It is another example of the fact that mean-mindedness is the essential handmaiden of right-wing dogma.

Mr. Patrick Cormack: Will the hon. Gentleman give way?

Mr. Wilson: I shall give way in a moment. I want to deal with the people who will be affected by this and explain to Conservative Members why the Secretary of State's offer is inadequate.
In a sense, I am trying to be helpful. I am dealing with the short-term aim of trying to build genuine safeguards into the legislation. Conservative Members will be affected by the long-term consequences of what is being done, but that is not my responsibility or concern.

Mr. Cormack: rose—

Mr. Wilson: I shall give way in a moment. Let us consider the number of people involved in the various schemes, including those schemes to which the Secretary of State made no reference this afternoon. There are 700,000 holders of the senior railcard, 700,000 holders of the young person's railcard and 250,000 holders—the Secretary of State did not mention this—of the family railcard.

Mr. MacGregor: There is a distinction. The family railcard—obviously this can be discussed—is a clear example of a marketing initiative without the same social connotations as the senior citizens railcard or the young persons railcard. The marketing initiative is frequently changed to meet new marketing conditions. Therefore, there is a distinction.

Mr. Wilson: The family railcard is a social device to get people who cannot necessarily afford to travel otherwise out of the cities and into the country during off-peak periods. It may have an economic benefit for the railways,

but it also has a social benefit. It falls into exactly the same category because, if it were taken away, it would not be a significant financial loss to the railways, but it would be a massive social loss to those who enjoy its benefits. The Secretary of State will be on his feet a few more times if he responds to each of my points.

Mr. Cormack: rose—

Mr. Wilson: I shall give way in due course.
There are 740,000 holders of the London travelcard. Specifically on the railways—because the travelcard also covers other forms of transport—there are 300,000 holders of the network card and an additional 300,000 holders who benefit. That is 600,000 people with a network card. There are 55,000 holders of the gold partners card. In total, 2·33 million people benefit from the existing railcard system. All of those people have security in the knowledge that such benefits exist, and will continue to exist, throughout the network. In the legislation, the Government are removing that certainty and replacing it with the lottery that the Secretary of State has been dealing with today.

Mr. Cormack: The hon. Gentleman is making the speech that perhaps he should have made if my right hon. Friend the Secretary of State had been intransigent. He is paying no regard whatever to the fact that there is no statutory safeguard at present—he is simply spreading unease and anxiety among people throughout the country when he should know better.

Mr. Wilson: The hon. Gentleman may think that he is off the hook with those remarks, but he is not. Frankly, the question whether he accepts what has been said or listens to the facts is a matter between him and his conscience, and his constituents. One of the facts is that many hundreds of thousands of people who hold railcards at present were not covered by the Secretary of State's announcement. We will refer to other deficiencies in the statement later.
I see that the hon. Member for Aberdeen, South (Mr. Robertson) is trying to get to his feet. He was a member of the Standing Committee that considered the Bill. He voted for every dot and comma of it and against every effort by Labour Members to build in safeguards. The idea that he has turned up now to express concern is not a runner.

Mr. Raymond Robertson: Will the hon. Gentleman take the time to tell the House what guarantees present railcard holders have that British Rail will not withdraw them tomorrow?

Mr. Wilson: That is an idiotic question. They have the same guarantees as they had yesterday that British Rail would not guarantee them today. But a secure system is in place, based on the social as well as the economic remit of British Rail. It introduced railcards and it has not withdrawn them for years. Why? That is precisely the point that I am coming to.
The fallacy on which many comments made by Conservative Members are based is that railcards are an economically profitable spec for British Rail. They are not. That is made clear in a document that is crucial to the debate. If Conservative Members have not read the document, they should have. It is a discussion document on network benefits drawn up by the Secretary of State's


Department. The document contains the figures on the disabled persons railcard, which I shall deal with in a moment, and on other railcards.
The document states that, while those railcards are profitable overall, they are not moneyspinners. In 1991–92, the senior citizens railcard went into deficit, and the discount rate had to be changed to restore profitability the following year. So the senior citizens railcard is not profitable; it exists because of British Rail's decision to have it as a social benefit. That is the reality. That is why there is a distinction between British Rail operating the benefits and a plethora of private operators with different motivations being asked to operate them.
Let us examine some of the other conclusions of the document:
Private operators, whose profitability will depend on filling seats, can be expected to exploit modern yield management techniques fully. We believe it would be wrong to tie their hands by requiring the perpetuation of the current range of Railcards.
That is the basis on which the Secretary of State has hitherto proceeded.
Of course, the Secretary of State has climbed down today by bringing the young persons railcard and the senior citizens railcard into the same category as the disabled persons railcard. But it is instructive to examine why the disabled persons railcard was provided for in the first place. Again, shamefully, it has nothing to do with social concern. It has nothing to do with the idea that disabled people have rights and that it is a good social ethos that they should be given reduced cost travel to liberate them and enhance their lives.
In one of the most cynical sections of the document, the case of disabled persons railcards was discussed:
There would undoubtedly be strong criticism of a policy of allowing the market to decide the future of Railcards. This would be particularly intense in the case of the Disabled Persons Railcard…Ministers will want to consider whether there is a case for making an exception for this Card. Financially, the Card is not very significant one way or the other—around 40,000 Cards were sold in 1991–92 with a revenue of around £0·5 million from Card sales, and £2·5 million from fares…Many operators might decide"—
I hope that Conservative Members will listen to this, because it is a lesson for the future—
that the public relations benefits of continuing to offer discounts to disabled people are well worth any small cost. But this is by no means certain and would be an insufficient counter to those who would seek to argue that the Government was being callous in not guaranteeing the continuation of these Cards. On the other hand, a decision to offer such a guarantee would be unwelcome to operators; it would amount to direct intervention in their decisions about ticket pricing and would limit their commercial freedom.
So there we have the reality. Private operators will not want to operate the railcards and it is acknowledged that they would not even accept the disabled persons railcard if it was not imposed on them. The Government recognise that, for public relations benefits, they must maintain an obligation to operate the disabled persons railcard. Therefore, it is presented as a virtue in the Bill.
On exactly the same basis, they have decided that the public relations benefits of including the senior citizens railcard and young persons railcard in the same category is overwhelming. That is the decision which has been taken now. But exactly the same doubts exist that pressures will come to bear on the franchising director not to impose

those conditions because of the economic consequences and because the operators do not want them in the first place.
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By not writing into the Bill the continuation of these schemes, the Government are putting them, in any recognisable form, in jeopardy. If any Government Member wishes to support the view expressed in this document as to the only reason why it was necessary to continue the disabled persons rail scheme, this is the time to do so. That is the logic of it.
Of course, what is announced today is an advance, a step forward; at least these two other cards have been brought into the same category. It is a step forward that was bitterly resisted throughout Committee, not by the Secretary of State, because he was not present, but by the Minister and all the little echoes behind him, who voted quite specifically on the instructions of the Whips to deny any further concessions on railcards.
We now have these concessions, but they still leave out many categories, and must still be seen against the background of the operators not wanting them and working from day one, if these operators ever come into being, to get rid of them; and of the political decision not lying with the Government, but resting at arm's length with the franchising director, who will be able to interpret how these matters should be applied.
That, I am afraid, is the message. It is an advance; it is better than what was there before; at least some lip service is paid to the idea that there will be senior citizens and young persons railcards, although the network benefits in the south-east for families are apparently to be cast aside. But these are not guarantees, and they will not be seen as guarantees.
The only way to safeguard the benefits of the network is to safeguard the network itself. The fragmentation of and the risks to those benefits are an inevitable consequence of the fundamental decision to break up the railways.

Mr. Nicholas Winterton: I am a signatory to this new clause and I fully endorse everything that my hon. Friend the Member for Ashford (Sir K. Speed) has said. Like him, I welcome very much indeed the concessions, the announcement, the statement, the assurance, given by our right hon. Friend the Secretary of State for Transport.
I am sure that the hon. Member for Cunninghame, North (Mr. Wilson) will concede that I am not one of those Back-Bench Tory Members who are easily bought off. Certainly, I do not have a history of that, and for as long as I am in the House I do not intend to establish a history of being easily bought off.
I hope that the hon. Gentleman will also concede that those of us who expressed grave concern about the omissions from the initial legislation were particularly concerned about the position of the elderly, the retired, the old-age pensioners. We were also particularly concerned about young people and, of course, as the Government showed that they were in the legislation, about the disabled.
Certainly I, and I believe my hon. Friends, wanted to see written into the Bill assurances that travelcards in respect of the elderly, the young and the disabled would be included in the legislation.
I have been in the House for a few years, and. I believe that the assurance that has been given by my right hon. Friend the Secretary of State for Transport is as close as anyone can get to having what we want written on to the face of the Bill. My right hon. Friend has stated that he will be giving a very clear directive to the franchising director that, in considering allocating and awarding the franchises, these railcards must be included. That assurance is good enough for me.
I represent an area in which railways are particularly important and in which the elderly and the young frequently use railways, both local services and inter-city, to go north and south, from Macclesfield to Manchester, from Macclesfield south to Congleton, and through to Stoke. I have had numerous letters from constituents asking me to ensure, as far as is possible, that in this legislation we get a commitment from the Government that the position of the elderly, the young and the disabled will be taken fully into account.
I say again to the hon. Member for Cunninghame, North, who spoke with some passion from the Opposition Front Bench, that Conservative Members have obtained sufficient assurance not to push the new clause to a Division, but to accept in the spirit that it has been given the very firm assurance by my right hon. Friend the Secretary of State.
I hope that the Opposition accept the distance which the Government have gone in seeking to meet the concerns that have rightly been expressed by the elderly and the young. I give credit to the Government, the Secretary of State and the Minister of State that the disabled had already been taken into account. I believe that the directive is the assurance that the elderly and the young wanted, and I am happy to accept it.

Mr. Peter Snape: I would not say that the hon. Member for Macclesfield (Mr. Winterton) is easily fobbed off, but I urge him not to accept at face value everything his right hon. Friend has said.
The Secretary of State has moved some way, and obviously we are delighted, although the cynics amongst us would say it takes an impending defeat for such a gush of social concern to flow from the Government Front Bench. The right hon. Gentleman has not yet said specifically that all franchisees will accept a national scheme for all cards. If he has said that, that is fine and we have made some progress, but he did not cover every scheme. One card that has not been mentioned so far in the debate is of great benefit to one of the few flourishing industries we have left—there are not many after 14 years of Tory government.
We sell tourism by promising people the use of a BritRail card which enables incoming tourists to use the entire British Rail network. Given that this barmy piece of legislation envisages some 20 franchisees, I wonder whether the Secretary of State has considered the BritRail card. I hope he will think carefully about it and give us some assurances.
I urge the hon. Member for Macclesfield and his hon. Friends to look closely at any legislation that the Government introduce on the lines of the Secretary of State's speech this afternoon.
The argument is continually waged that railcards are non-statutory. They were first introduced by the then much-maligned British Rail. Senior citizens railcards were

issued on a national basis during the stewardship of Sir Peter Parker and the Conservative Administration took the first opportunity not to reappoint him.
As my hon. Friend the Member for Cunninghame, North (Mr. Wilson) pointed out, since they were first introduced there have been misgivings amongst successor administrations of British Rail about their efficacy and their profitability. However, to withdraw them would have caused an enormous row and we have been reminded today that 650 hon. Members have written to the Secretary of State in protest.
The other myth is that it is in the commercial interests of operators to accept them. It is no such thing. One of the early batch of franchises is to be the former London-Tilbury-Southend line, a self-contained stretch of railway from Fenchurch Street to Southend shortly to have its own self-contained signalling system, at public expense, of course. It would not be in the commercial interests of any franchisee of the London-Tilbury-Southend line to accept travelcards. Future franchisees would want to keep their revenue to themselves. I shall explain in a moment why it is not in their commercial interests to do so.
I do not know whether Conservative Members are aware of the way in which revenues are allocated to different commercial concerns through the use of cards. In the bus industry, they are allocated on the basis of an annual census in which a percentage figure is arrived at and allocated to different bus operators in an area. I think I see the Minister for Transport in London nodding in assent to that. Many larger operators in various parts of the country are desperate to get out of the schemes because they feel that their revenues are being diluted unfairly by their participation in them.
Many larger operators in the bus industry are not promoting regional schemes—I appreciate that we do not have a national bus scheme—available on every company's buses in a region but are promoting heavily their own schemes which are available on only their own services. I advise the hon. Member for Macclesfield and others to look carefully at any assurances given by the Secretary of State not only on pensioners railcards—although I appreciate that that is the main concern of the hon. Member for Macclesfield—but on the other railcards to which I referred to ensure that a genuinely national scheme is forced on franchisees, because forced on them it will have to be.
I remind the Secretary of State, who has been dragged kicking and screaming into the Chamber to make this afternoon's concession, that when some municipal bus undertakings were privatised it was a condition of their privatisation that they accepted regional bus passes. It was widely felt among the managements that such acceptance would dilute their revenues.
I hope that Conservative Members who have indicated their voting intentions will go further and ensure that we are talking about a national scheme for pensioners and others and will not allow any doubt to creep in. Nor should they leave franchise directors with any leeway to decide, depending on the profitability of views of individual franchisees, that only a local or regional scheme will be acceptable.
I urge Conservative Members not to listen to the Secretary of State but to examine what is happening. The hon. Member for Macclesfield referred to what is taking place in his part of the country, and I am not exactly a


stranger to his constituency. I spent the early part of 1971 trying to ensure that he never made it to Parliament. Alas, I was unsuccessful and he has been here ever since.
If the hon. Gentleman catches the train north to Manchester, he will find in place the Manchester metrolink service. It is in place only because of the insistence of the passenger transport executive that through travel ticketing arrangements be accepted. Manchester metrolink was extremely reluctant to accept that. It wanted to run its own self-contained strategy of a modern tramway and did not want its revenues diluted by a regional scheme—regional in that case, but national in the context of our debate.
I hope that the hon. Member for Ashford (Sir. K. Speed), among others, will press the matter to a Division and will clearly show the Secretary of State that there is no scope for wriggling on the issue. Let us insist on a national scheme.

Mr. Cormack: The House will be delighted that the hon. Member for West Bromwich, East (Mr. Snape) failed in 1971 to prevent my hon. Friend the Member for Macclesfield (Mr. Winterton) from being elected. Think what we would have been deprived of had he succeeded. It was interesting to hear the speech of the hon. Member for West Bromwich, East. I had hoped that he would be making it from the Opposition Front Bench.

Mr. Snape: I have made too many from there.

Mr. Cormack: Not too many for some of us. I hope that he makes many more from the Opposition Front Bench. After all, the hon. Gentleman who spoke from that position, the hon. Member for Cunninghame, North (Mr. Wilson), was, to put it mildly, rather churlish. He had obviously carefully prepared a speech and arrived here thinking that the Secretary of State would not meet us on the issue.

Mr. Wilson: I assure the hon. Gentleman that I do live in the real world. I read the newspapers, and I came here today knowing that a deal would have been stitched up, that the rebels could go quietly away and that there would be a major climbdown, as there has been. I appreciate that, but I reserve the right to point out to Conservative Members the inadequacies of the climbdown.

Mr. Cormack: The tone of that intervention was better for the hon. Gentleman's blood pressure than was his speech. I was afraid that he might do himself an injury while he was fulminating at the Dispatch Box.
This afternoon has been a classic example of a well orchestrated campaign, to which our listening Secretary of State has responded. I promised our friend, the late Robert Adley, that I would support any new clause along the lines of this one; indeed, I talked to him about it just a day or two before his heart attack. I renewed that promise to my hon. Friend the Member for Ashford (Sir K. Speed), to whom I pay tribute for his organisation of the campaign and the forceful moderation with which he has pursued it.
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We were concerned about two categories of people. The disabled had already been catered for, but we were worried about the elderly and the young. Perhaps, like my right hon. Friend the Secretary of State, I should declare an interest: I have a mother who is 83 today, who enjoys using

her railcard from time to time. I have a son who has the good sense to be at university in Scotland and who regularly uses his railcard. Both of them were apprehensive at the suggestion that the facility might not continue.
We all have a number of duties in this place. One of them is to speak up for those least able to articulate for themselves. Another is not to spread alarm and despondency when there is no need to do so. Until my right hon. Friend's speech there was a degree of anxiety throughout the country that, in the wake of sweeping changes—do not welcome all of them—certain facilities which were not statutorily guaranteed but which were much valued would be withdrawn.
Because of this, the late Robert Adley and my hon. Friend the Member for Ashford decided, on the eve of these momentous changes to our rail system, that we must include this provision in the legislation. My right hon. Friend has always, in every post, had the reputation of being a listening Minister. I know from school teachers in my constituency that he was much appreciated as Secretary of State for Education and Science. He has listened carefully and he has conceded that we have a real point. He has promised that in another place the legislation will be suitably amended.
In so doing, my right hon. Friend has not only met the widespread apprehension and responded sensibly to Members on both sides of the House; he has also, in the process, shot the fox of the hon. Member for Cunninghame, North. I do think that the hon. Gentleman should be a little more welcoming, a little less churlish. We should all be united in our concern for the elderly, the disabled and the young, and in our desire to achieve as good a rail system as we can for the 21st century.
The Bill has already been improved in some particulars; I hope that it will be further improved in others. Without seeking to disguise the fact, we should all be thankful to the Secretary of State for listening and responding so positively. I am delighted that he has done so.

Mr. Nick Harvey: I warmly welcome the Government's announcement—all the more so because of the length of time that it has taken to come. We remember the vociferous way in which the Government have resisted anything of this sort hitherto, so it is all the more remarkable that they have conceded it now.
Powerful and elegant though the speeches by the hon. Members for Ashford (Sir K. Speed) and for Macclesfield (Mr. Winterton) were, nothing that they said today was new or had not been said on Second Reading, in an Opposition supply day debate, in Committee—frequently—and again in these debates.
I suspect that at some point in their private discussions they must have said something even more powerful, if slightly less elegant, to the Secretary of State. I think that this says something about the benefits to the House of the Government having a small majority. It may have been the anticipation of a slightly smaller majority in the future that brought pensioners to the forefront of Government thinking.
I echo the points made about other types of network card that have not been referred to, particularly the London card. Yesterday's announcement about the Government's future intentions in terms of franchises suggests that the commuter services around London—which are currently all operated by one operator, Network SouthEast—may in future be operated by seven or eight


franchisees. Bus deregulation is coming to London and I do not think it is unduly fanciful to expect that the London underground network may be run on a line-by-line basis at some point in the future. We are looking at a multiplicity of operators in the area of Greater London, instead of the two or three that we have at the moment.
Although it is fair and right for the Government to say that none of these operators currently has a statutory obligation to participate in the London travelcard scheme, consumer groups and others seeking to persuade the operators of the benefits of the scheme currently have to persuade only two or three operators; in future they may have to persuade 12, 15, 20—goodness knows how many—to participate in a scheme of this sort.
It is worth noting that the new clause does not try to set particular percentages of reductions that should be given, or set in stone the character of any card or benefit that should be available. It simply seeks to enshrine the principle that operators should participate in some network benefit. I think that the argument should continue that the other benefits—not only in London, but the BritRail card and others—are worth including in the legislation. I think that future operators should be required to participate in a network scheme, without trying to set in stone what the benefits or characteristics of such network arrangements should be.

Sir Keith Speed: My right hon. Friend has given a very positive reply and I am sure that it includes the inter-modal card. I see that my right hon. Friend wishes to intervene, so I will give way.

Mr. MacGregor: May I say something? It will take a little time, but it is important that I say it because my hon. Friend and others have raised it in the debate. May I make another intervention, by leave of the House?

Madam Deputy Speaker (Dame Janet Fookes): I do not think that the Secretary of State needs the leave of the House to intervene; but, by tradition, interventions are short and I hope that the right hon. Gentleman will comply with that principle as far as possible.

Mr. MacGregor: I will try to do so, Madam Deputy Speaker. However, my hon. Friend wanted me to comment on the travelcard and I would like to explain the position because it is important that everyone understands where we are.
Travelcard is rightly popular and has brought the benefits of simplicity and value for money to the public. It has been highly beneficial to the operators because it is a powerful marketing tool that has increased patronage. It is in the interests of both passengers and the new railway operators that it should continue.
There is a problem, however. Subsection (3) of the new clause was intended to cover that problem. I mentioned that the clause was defective: it is defective in this case, for example. It would not be possible for the Railways Bill to impose any requirement on the providers of other kinds of public transport service to accept multi-modal ticketing arrangements. The powers of the franchising director relate only to the provision of railway services.
Under the Bill as already drafted, the franchising director will have the power to require franchisees to participate in the travelcard scheme. I propose to give guidance on the exercise of that power. Franchisees will then be required to participate in accordance with their

franchise agreement. I think that the same mechanism could be used to secure participation in the travelcard-type systems that exist outside London, but that would have to be done in conjunction with the passenger transport executives.

Sir Keith Speed: I thank my right hon. Friend for that intervention, which reinforces my desire to seek the leave of the House to withdraw the motion.

Madam Deputy Speaker: Is it the wish of the House that leave be given? [HON. MEMBERS: "Aye".]

Mr. Wilson: On a point of order, Madam Deputy Speaker. I hope that Conservative Members will not regard it as churlish, but we have just had a fresh announcement in the form of an intervention in a speech about withdrawing the new clause. I do not think that one has to be a devotee of "Erskine May" to regard that as an odd way to proceed. I would have hoped that it would have been possible to have further clarification from the Minister on his statement on the London travelcard, which was thrown in as an intervention.

Madam Deputy Speaker: Order. It is simple. Any hon. Member may disagree with the proposal that the motion be withdrawn. Then we proceed with the debate.

Mr. Wilson: I wish to object to the motion being withdrawn until we have had a modest discussion on the London travelcard and the implication of the Secretary of State's announcement.

Mr. Peter Bottomley: My hon. Friend the Member for Ashford (Sir K. Speed) has helped to clarify the position. My right hon. Friend the Secretary of State said that under the Bill'he will meet what my hon. Friend has asked for. It seems unreasonable to prolong the debate by asking my right hon. Friend to say that what cannot go in the Bill should be covered by it.

Dr. John Marek: I apologise for not agreeing with the hon. Member for Ashford (Sir K. Speed) that we should make progress. The Government have moved on the point and perhaps we should make progress, but I want to make one point.
No doubt the Secretary of State's guarantee will be as good as his word and he will ensure that appropriate amendments are made in another place. However, it is possible that the cards will become disused by attrition. For example, a high joining fee might be sought; instead of the normal £10 or £15, perhaps £35 will have to be paid. If so, many pensioners could not put that amount up in front to have the benefits of a card.
Alternatively, the percentage discount might come down. Because of the impoverished state of British Rail, discounts have come down recently. The half-price discount might be reduced to 33 per cent. It is not inconceivable that a franchisee who was not enamoured by having to obey the legislation would give discounts of only 10 per cent. or 15 per cent. and thereby make the cards unattractive to pensioners. I hope that there is no unwritten agenda and that travelcards will be protected by the legislation and will generally cost the same and give the same benefits as at present.

Mr. Tim Rathbone: May I add my endorsement of the point made by my hon. Friend the Member for Ashford (Sir K. Speed) in moving the amendment and


make an addendum to what he said? In my hon. Friend's speech and in the speeches of other hon. Members on both sides of the House the accent has been on the pleasure aspect of concessionary travelcards, in other words, their use by old people to go on holiday or by young people to travel wherever they wish.
There is a need imperative. In my constituency old people use trains to go to the nearest town to do their weekly shopping. That is important. Students use trains to get to where they are studying. There is more to the point than the pleasure motive and I am glad that my right hon. Friend the Secretary" of State has responded to the pressure.
I join other hon. Members in asking for further clarification about the London travelcard. That, too, is important to my constituents. The principle is important to people in constituencies near large metropolitan areas. Like the hon. Member for Cunninghame, North (Mr. Wilson), I would welcome more elucidation from the Secretary of State. What he announced briefly is a step in the right direction, as was his reaction to other amendments. I welcome that and thank him for it.

Ms Glenda Jackson: While I, too, would welcome further clarification of the Secretary of State's announcement about the London travelcard, may I say to the hon. Member for Ashford (Sir K. Speed) and his hon. Friends that the concerns for the elderly, the young and the disabled which were so eloquently expressed by the hon. Member for Macclesfield (Mr. Winterton) were equally eloquently expressed in Committee by Opposition Members? On that occasion those concerns, which still remain, fell on deaf ears.
4.45 pm
I hope that hon. Members will not consider it churlish on my part to say that what has occasioned the Secretary of State's change of heart is a response not to the cries of his hon. Friends or, indeed, the travel needs of the elderly, the young and the disabled, but possibly to the report from the Save Our Railways campaign in which a poll of more than 5,500 Conservative voters in 58 Tory marginal seats showed that if the Bill went through Parliament unaltered at least 38 Tory Members might lose their seats.

Mr. Wilson: With the leave of the House, Madam Speaker. It is essential to place on record our astonishment at the way in which the Government continue to handle the Bill. We have had months of debate. We had 36 sittings in Committee, many of them devoted to issues of network benefit. Railcards and travelcards were raised repeatedly and discussed at great length. With the exception of the railcard for disabled persons, the Government said repeatedly that nothing would be done. Specifically on the London travelcard, the answer was the same.
We were waiting today for a clear-cut statement of intent. We got something for pensioners and young people and we welcome it unreservedly, but even then the Minister could not make a clear statement on what would be done about travelcards. We had a shambolic announcement in the form of an intervention which still does not tell us whether the London travelcard will live or die, because not only the franchising director but someone else will have to be consulted.
If the campaign to save the London travelcard has been successful, it will be a tremendous victory which will be widely appreciated in London. If we have forced that out of the Government at this late stage, it is a great success, but what a humiliation for Tory Members who served on the Standing Committee and who did not even ask for it, far less receive it. By the same token, what a humiliation it is for Tory Members who accepted meekly in Committee that there was to be no movement on railcards for senior citizens or young people. Now apparently the threat of rebellion by a dozen Tories has achieved what the 14 on the Standing Committee did not dare ask for.
Let us have, perhaps at another time and in better order, a detailed statement from the Secretary of State on the prospects of the London travelcard so that they can be studied and discussed. While railcards for senior citizens and young people have been hard fought for by my hon. Friends, by some Tory Members and by the public, today's announcement will not end all the uncertainty. It covers only 700,000 of the 2·3 million people who have railcards.

Mr. MacGregor: The reason why I made the remarks about the travelcard was that my hon. Friend the Member for Ashford (Sir K. Speed), perhaps sensing the mood of the House better than I had, wanted to bring the debate to a close. I had requests for a statement on the position of the travelcard. That is why I intervened.
Since the hon. Member for Cunninghame, North (Mr. Wilson) did not allow the debate to finish, let me point out to him that there was nothing strange about my statement. I am beginning to think that the hon. Gentleman would wax indignant about what he had for breakfast. He seems to go over the top on every occasion.
With regard to travelcards, the position is very simple and has been stated very clearly. It is not possible to go beyond the Bill's provisions and require the franchising director to impose conditions in respect of transport other than railways. Such a provision cannot be included in the Railways Bill and that is why I have suggested another way forward. It is the right way to proceed, as I hope my statement has made quite clear.

Sir Keith Speed: As I am totally content with my right hon. Friend's statement, I wish, with the leave of the House, to withdraw the motion.

Madam Deputy Speaker: I am afraid that that is impossible. An hon. Member may not ask twice for the same thing. I shall therefore put the new clause to the House—a procedure which will not necessarily force a Division.

Question put and negatived.

New clause 24

EXISTING PASSENGER SERVICE OPERATORS AND ASSOCIATES TO BE ELIGIBLE AS FRANCHISEES

'(1) Notwithstanding anything in section 22 of this Act, a public sector operator shall be eligible to be a franchisee if at the date on which this Act was passed—

(a) that operator, or
(b) any other body of which that operator was at that date, or is at the time when the franchise agreement is made, the subsidiary or holding company,
was providing or operating services for the carriage of passengers by railway in the exercise of a function conferred by or under any enactment.

(2) For the purposes of this section "subsidiary" and "holding company" shall be construed in accordance with section 736 of the Companies Act 1985.'.—[Mr. Prescott.]

Brought up, and read the First time.

Mr. John Prescott: I beg to move, That the clause he read a Second time.

Madam Deputy Speaker: With this, it will be convenient to discuss also the following amendments: No. 29, in clause 22, page 23, leave out from beginning of line 41 to end of line 19 on page 24.

No. 43, in page 23, line 41, after `(1)', insert 'Subject to subsection (1A) below,'.

No. 44, in page 24,. line 16, at end insert—
'(1A) The provisions of subsection (1) above shall not apply to any public sector operator who at the date on which this Act received Royal Assent had a statutory power, duty or obligation to provide or operate any public railway passenger service.'.

No. 57, in page 24, line 16, at end insert—
'(1A) Nothing in subsection (1) shall prevent—

(a) the British Railways Board (in this Act referred to as "the Board"); or
(b) a wholly owned subsidiary of the Board, from being a franchisee.'.

No. 32, in page 24, in clause 23, line 34, at end add—
'(4) The Board shall always be invited to tender by the Franchising Director.'.

No. 56, in clause 27, page 28, line 17, leave out from 'the' to end of line 18 and insert 'Board'.

No. 47, in clause 72, page 80, leave out line 38 and insert—
' "Public sector operator" means—

(a) any Minister of the Crown, Government department or other emanation of the Crown;
(b) any local authority;
(c)any metropolitan county passenger transport authority;
(d) any body corporate whose members are appointed by a Minister of the Crown, a Government department, a local authority or a metropolitan county passenger transport authority or by a body corporate whose members are so appointed;
(e) a company—

(i) a majority of whose issued shares are held by or on behalf of any of the bodies or persons falling within paragraphs (a) to (d) above;
(ii) in which the majority of the voting rights arc held by or on behalf of any of those bodies or persons;
(iii) a majority of whose board of directors can be appointed or removed by any of those bodies or persons; or
(iv) in which the majority of the voting rights are controlled by any of those bodies or persons, pursuant to an agreement with other persons (and expressions used in sub-paragraphs (i) to (iv) above in section 736 of the Companies Act 1985 have the same meaning in those subparagraphs as they have in that section);
(f) a subidiary of a company falling within paragraph (e)
above;'.

Mr. Prescott: The debate on new clause 12 characterised the attitude that the Government have adopted throughout the debates on the Bill—immediate changes, a few minutes' consideration without any proper assessment. As usual, the Government are making up policy as they go along. That has been pointed out in a very powerful way. The new clause raises another principle that was endorsed by Robert Adley: if the House is disposed to support an hon. Member's argument on one

occasion, it should do so subsequently. Robert Adley felt very strongly about British Rail's right to bid for franchises. The change of mind shown by the Secretary of State's immediate decision was brought about by pressure on the Floor of the House. The Government were totally indifferent to similar pressure in the Standing Committee.
I cannot help feeling that we have here something of a north-south division. It is accepted that there should be a statutory requirement to provide a pensioners pass in London, but not in areas outside London. Action is being taken because of the sensitivities in the southern area. I hope that the Secretary of State recognises that we are dealing here with a national matter. Decisions should not be influenced by geographical or political considerations. I hope that northern Members will fight as hard for their constituents as southern Members clearly have done.
British Rail's right to bid for franchises reflects an ideological position taken by the Government rather than common sense. This is a matter of common sense, and I hope that it will be considered in that light. New clause 24 would give British Rail the right to bid for franchises, of which the House was notified in a statement yesterday. BR should have the same bidding rights as any other operator. It certainly has all the necessary experience.
As drafted, the Bill will not permit public sector operators to bid for franchises. Evidence about the effectiveness of privately owned or privately operated railways is to be found in Sweden. The Swedish counterpart of British Rail was allowed to bid. I understand that of the 21 franchises that have been granted, 17 have been won by the state operation. It appears that the Swedish Government regarded the bid from the most experienced operator as the best one. Unless it is felt that the British public sector is not as good as the Swedish public sector, BR's management should be allowed to bid.
The Secretary of State will probably say that the management may bid if they do so by way of a buy-out procedure. Apparently, managers bidding for franchises will be those who currently run the public sector operation. The essential difference will arise from their introduction to the disciplines and philosophy of the market. As private owners, they will be intent on satisfying their own greed rather than meeting public need.
There is far too much ideology here. It is assumed that private must be good and public must be bad. That is not borne out by the evidence in this country or abroad. The Government seem to think that privatisation encourages a commercial ethos and enterprise which will result in a better service for the public. I concede that there is probably as much bad management in the public sector as in the private sector, but there is little to be gained from point-scoring about the failures of management. The skills of managers, like those of the work force, are much less well developed in this country than they are abroad. That is a sad reflection on our training and on our priorities in management and worker skills.
The Government have taken the view that this is all about competition, but they have not proved that case, either. In fact, competition is not being allowed. In this regard, the practicalities are extremely difficult. What is proposed is the transformation of a public monopoly into a private monopoly. Where franchises are granted, it is unlikely that the operators will have their own rolling stock. The Government have proposed that the rolling stock should be owned by leasing companies. The reason


is that the contract time envisaged for franchising is about seven years—considerably less than one would expect for rolling stock leasing. This, the concept of private ownership and competition, is watered down.
This is not competition; it is the granting of an exclusive right to an operator. An undertaking that does not even own its assets will be expected to contribute the essential private managerial flair which, it is argued, will be available in the private sector. It is contended that when public managers go private, they will be much better at managing. Again, that has not been proved.
We have been told that franchising is not now to be limited to the seven services that were announced in 1993. There are to be a further 18, making a total of 25. The additions account for most of the remaining two thirds of the system. The Secretary of State has not yet made up his mind about what should happen to the cross-country systems. He said yesterday that certain services would be exempt from the provisions of the Bill. A very important exemption is the British end of the European railway system through the channel tunnel. I assume that, for reasons connected with joint contracts and complicated European affairs, those services will not be offered for franchise. Presumably, they will remain under the control of British Rail. In other words, British Rail will continue to be an entity in this field. With the exception of the rolling stock on lines connecting with Europe, it may well have to lease back its own stock. That will create problems. In any case, BR will continue to be an important operator for at least the remainder of the century, irrespective of what happens in elections.
British Rail will continue to play an important part in respect of freight, too. Nevertheless, it will almost be the operator of last resort. If an operator does not provide the service, someone will ring up British Rail, almost as though it were the Automobile Association, and say, "Come and operate this system because the private sector operator has gone bust." As distinct from the public sector, if a private sector operator finds that it can no longer meet its financial commitments and is bankrupt, it will be obliged to cease trading and the service may stop. The Secretary of State may argue that the franchising director would take over the service and run it. Presumably, he would become the operator in those circumstances and then readvertise them.
5 pm
A transport system must operate 24 hours a day. The public rely on it because it is a crucial part of any industrial operation. Franchise operation 19, covering south London and the Sussex coast, has been identified by the Secretary of State as one for which private sector operators can bid. It is also the operation in which Mr. Sherwood of Sea Containers was very interested. What happens if most potential operators take Mr. Sherwood's view that the coast run from Southampton to Hastings is not very profitable?
Although it is true that many people travel on that line and that it uses clapped-out stock, Mr. Sherwood still does not want to run it. He offered to bid for the rest of the system, with the exception of the Reigate-Tonbridge line. If other operators are of the same view, either the network will have to be changed or someone will have to come in and pick up the bits that Mr. Sherwood or others judge are

not profitable—and that someone will be British Rail. That is not an effective way to run a railway system, because it would break up the whole basis of the network in what would be one of the most congested parts of any railway system. There will be increasing concern about that—particularly among Conservative Members, when they realise the consequences for the rail services in their constituencies.
As the Bill progresses, Conservative Members will not necessarily have the luxury enjoyed by the hon. Member for Ashford (Sir K. Speed) in negotiating with the Secretary of State to save particular travelcards and concessions. They will have to queue up at the door of the franchising operator—not spend time in a smoke-filled room pressurising the Secretary of State, knowing that the right hon. Gentleman has to come to the House and vote for or against a particular proposal. The luxury of accountability will be lost to right hon. and hon. Members, because the House will have delegated to the franchising director the right to make such decisions.
Anyone who complains to the franchising director will be reminded of the objectives that he has been set in the name of competition. He will say, "You placed those obligations on me, and if I do not observe them, I can be sued by another operator." Any chance to make decisions about the transport system and to put pressure on the Secretary of State as an essential part of public accountability will be sacrificed. Although the right hon. Gentleman may hope that there can be bids for the network definition contained in his document, he has already made it clear that much will depend on operators picking and choosing. We must wait and see.
In Committee, the Secretary of State reserved the right to control the franchising director's actions until July 1996—an interesting political period, just before the next general election. The right hon. Gentleman is retaining certain powers so that he can oversee any difficulties with Network SouthEast, with all the political implications that that has, as we have seen recently. The services will not be franchised in the way that the Secretary of State suggests; instead, the network will be broken up, and British Rail will be expected to intervene as the operator of last resort to provide certain services.
Mr. Sherwood made it clear that, apart from not wanting to run certain lines, he expected freedom to charge what he liked. I do not know what decision the Secretary of State has made in regard to the amendment debated yesterday and any capping of fares. I look forward to hearing his remarks later, when the House will have an opportunity to vote on that amendment. Mr. Sherwood asked also for tax relief on season tickets. He clearly knows what he wants by way of a profitable deal—but it would cost taxpayers a lot more, they would get a lot less for their money and fares would be considerably higher. Grave doubts remain about bids being left in the hands of private operators, with no services being provided by British Rail.
In the past few weeks, we have seen how much public opinion is swinging in favour of retaining British Rail, whatever criticisms might be made of it—and despite the fact that everyone knows that it is under-invested compared with European railways. Its financial support is only some 20 per cent. of that in Europe, which puts a great deal more into its railway systems, however one measures that. Europe has the common sense to acknowledge that if one places a rail network in the hands of entrepreneurs, they will be interested only in making a


profit. Their whole rationale is to make money, and their profits will have to be financed by a raft of subsidies that would increase the public sector obligation.

Mr. Rathbone: The hon. Gentleman referred to a part of British Rail's network that affects my constituency. Many people have been deeply worried by scaremongering of the type in which the hon. Gentleman has indulged this afternoon—saying that this line will be closed down, that service will be stopped and fares will be increased. The truth is that Mr. Sherwood made an awful blunder when he made those statements, because he ruled himself out as a franchisee. The people in his company know that. His public relations adviser leapt down Mr. Sherwood's throat the day after he made that announcement on television, because he knew that it wiped Mr. Sherwood out of consideration as a franchisee on those terms.

Mr. Prescott: I have often been told by Conservative Members not to lecture business men because they know what is in their own interest. I assume that Mr. Sherwood knew what he was talking about. After all, he took the Government to the cleaners when all the ports were privatised and he bought Sealink for about £40 million, and then sold the Isle of Wight services alone for £100 million. Mr. Sherwood made an awful lot of money out of the Government. If I were asked to judge whether the Government or Mr. Sherwood has the best commercial judgment, my money would be on Mr. Sherwood. I quoted him because he was to make one of the bids. Most of the other potential operators that the Secretary of State tells us about dare not raise their heads.
As to Mr. Branson of the Virgin Group, since it was announced that he could not cherry-pick and enjoy open access, he is no longer interested. Stagecoach was also supposed to be interested. The service that it ran from Scotland lasted only four months. A change from public to private ownership brought collapse in four months, and then good old British Rail had to take over and restore the service. The public appreciate that where British Rail does not maintain a service, the private sector will look after its own interests.
The argument is made that public management of British Rail is bad—but according to the White Paper, the Select Committee, and The Economist survey, British Rail's labour productivity is far in advance of any European system. That did not start with the present Government but has been true for 20 years, as studies made in the early 1970s show. As an innovator, British Rail introduced fast trains on conventional tracks and developed container ships ahead of anyone else. It has introduced innovation and techniques of which we can be proud.
The problem is that the Government took £3 billion from British Rail's public subsidy, and it shows. There has been some attempt to regain that ground but—under, I admit, a number of Governments—British Rail has never received enough money to replace clapped-out rolling stock, most of which was ordered in the mid-1950s. That is the reason for its financial problems.
It is argued that privatisation is better, and British Airways is often quoted in that context—but it had a massive writing-off of its debts. There was a change in Treasury rules, and British Airways made most of its profits at a time when it was a private company in public ownership. In many cases, the same management were

involved. To that extent, we cannot draw comfort from the suggestion that a change in ownership leads to an improvement. We must change the rules and some of the Treasury's attitudes to the public sector—we have been somewhat stupid about that—and we must recognise that simply changing the ownership is not sufficient to guarantee that the consumer is better off.
Anyone who doubts that should ask Mr. Branson of Virgin whether British Airways is better under private ownership. Under public ownership, we could have sacked the board and chairman of British Airways for some of their deplorable practices and made it clear that such practices are not acceptable. As it is a private company, we cannot do so. The Secretary of State says that we cannot interfere and, despite my protests, the Civil Aviation Authority takes a similar view.
The assumption that privatisation leads to improvements is not borne out by the examples of Tiger Rail and Charterail, which collapsed shortly after opening. Circumstances were difficult for them and their failure might not have resulted from poor management: other factors caused difficulties whether companies are publicly or privately owned.
Can anybody say that bus privatisation has improved the bus industry? Five-year studies show that buses are older and that fares are twice as high. Services are poorer and the network is smaller. A privatised bus company has not met the requirements of a public network service.

Mr. David Martin: Will the hon. Gentleman give way?

Mr. Prescott: No, I do not have time.
Interestingly, the Government did not deny the publicly owned bus service the right to bid for franchises. Much evidence tends to show that it is possible to allow public or private management to operate such services.
We have a good opportunity to measure public management against private management. If the Secretary of State wants to go ahead with the privatisation of the east coast line, which may be more attractive to an entrepreneur, why not inject the £1 billion into the west coast line, where it is desperately needed, in the way that I have suggested—through a combination of leasing and different financing arrangements—and let the public sector run it? Let us have a competition between the strategic east and west coast lines to see which management performs best. I could readily accept that spur of competition, but it is not proposed under the Bill.
One of the great difficulties is that British Rail may feel that it has no further role and that there is no need to improve because it will eventually be completely eliminated. That is wrong and the absurdity of it is emphasised by the fact that under European regulations French and other European rail companies will be exempt from franchise agreements and will be able to take over franchises on the east or west coast line. French rail companies can run our railways, but British Rail cannot. If that is not ideological nonsense from the Government, I do not know what is.
The Government will not be able to prevent such takeovers because they are at the heart of decision making in Europe. They believe in a free market and competition and believe that French or German rail companies should be allowed to bid, yet they will not extend that right to British Rail, which is absurd.

Mr. Nigel Spearing: Will my hon. Friend give way?

Mr. Prescott: No, I cannot; other hon. Members wish to speak.

Mr. Spearing: What about Union Rail?

Mr. Prescott: I am sure that my hon. Friend will have an opportunity to deal with that. As my hon. Friend suggests, Union Rail could make a bid because it, too, is exempt.
The new clause is a measure of good sense and I hope that the Secretary of State will consider it. It was well supported by Robert Adley, who constantly asked why British Rail cannot be allowed to bid for the franchise. If the Secretary of State wants to improve the Bill, the new clause is a useful and simple propositon. It would allow British Rail—which has the expertise, management skill and ability—the opportunity to show that, given the chance, it can operate services as well as anyone else. That is a fair opportunity for it, and without it British Rail will eventually become a second-class operation, offering only the services that other companies do not want. That is not a fair way to treat it. It would not be good for passengers and it certainly would not be good for British Rail. If the Secretary of State believes in competition, the least he can do is give British Rail an opportunity to compete.

Mr. MacGregor: We know what the Labour party is seeking under the new clause—no change. It wants to continue with British Rail as it is. [HON. MEMBERS: "Hear, hear."] I am glad that some of them acknowledge that.
Labour wants to continue with a monolithic, large state industry, with all the constraints and bureaucracies that that imposes, without the sharp incentives constantly to seek more customers—passenger and freight—that the private sector, through market pressures and disciplines, offers. That is what it hopes to achieve under the new clause.
The hon. Member for Kingston upon Hull, East (Mr. Prescott) gives the impression that Labour would spend much more taxpayers' money on British Rail, but we all know that it would not.
I am the first to acknowledge the considerable improvements that have been made in British Rail in recent years and the organising for quality initiative and the move to profit centres have helped. A new group of senior managers have benefited from those changes and are keen to take advantage of the opportunities that privatisation offers and to take up franchises under management buy-outs. [Interruption.] I acknowledge that that has to happen. I have said that throughout, but most people acknowledge that there is a need for further change and for further improvement. A monolithic nationalised industry imposes restraints on thrusting managers, and most people recognise that change is needed.
But for the Labour party, the status quo is all very well, and that is what it aims to achieve under the new clause.

Mr. Prescott: What status quo?

Mr. MacGregor: The status quo of British Rail remaining entirely in the public sector and operating all the franchise areas.
I have discovered from discussions with my hon. Friends that their position is different, and I should like to

deal with their concerns. Their first concern was about what would happen if no bid was made for a franchise or if no acceptable bid was made. I believe that the question of there being no bid is hypothetical, but the franchising director may conclude that a bid is not acceptable.
Their argument is: do we not need British Rail to ensure that services in a franchise area continue to operate? The system that we have designed ensures that there will be no problem, because if the franchising director does not grant a franchise in response to the invitation to tender British Rail will continue to operate that service. That is the fail-safe.

Mr. Stephen Day: I am grateful to my right hon. Friend for giving way, although I suspect that I will be less than helpful, for which I apologise. It is bizarre that apparently the Government do not think that British Rail is fit to tender, yet we shall rely on it if the franchise system breaks down. Surely there is some contradiction in that. Should not BR at least be given the option of bidding for services?

Mr. MacGregor: I shall deal with those concerns later.
If no bid is made for a franchise, there is not only the fail-safe; the position is better than that. We propose to set up shadow franchises. I announced yesterday what we think will be the remaining 18, but I made it clear that the figure is not set in stone. That fulfils our commitment to franchise the whole operation, but that will take place gradually with seven shadow franchises initially.
The purpose is to ensure that the franchise area makes good operational sense and to establish a financial track record. After the shadow franchise has been set up, it will have to operate for a period before the franchise director issues invitations to tender. That is fairly obvious. People need the financial track record and information before marshalling their bids. It means that the bids can be measured against British Rail's existing operations and financial track record.
If, in a particular case, the franchising director concludes that the bids do not give sufficient value for money compared with the existing British Rail operation, he will not grant the franchise. It will be a matter for the franchising director, and I do not want to interfere. Whether bids offer good value for money will be one of the conditions that the franchising director will have to bear in mind in granting franchises.
It could be argued, therefore, that the British Rail operation—what it is already achieving—is effectively a bid. If British Rail is allowed to bid separately, there will be other consequences, with which I shall deal in a moment. However, that is how the scheme will operate, and that is where there is a difference between this country and Sweden.
Sweden did not split the operation, thereby establishing a financial track record, so the basis for the bids was not the same. We have made it clear from the beginning that we are trying to inject private attitudes, discipline, marketing expertise and capital into the system. The existing Swedish railway had a huge advantage in making bids, with the result that only 3 per cent. of the bids went to the private sector.
Secondly—

Mr. Andrew Rowe (Mid-Kent): If one of the people showing interest in one of the shadow franchises is involved in an alternative form of transport, he will have


access to all the information—that is the purpose of setting up a shadow franchise. However, our experience of the channel tunnel rail link negotiations has been that, whenever the public have asked for any information of the slightest use in working out how much money is available for amelioration or other purposes, they were told that such information was commercially sensitive.
What is sauce for the goose is sauce for the gander and, if potential franchisees are allowed access to the information, so should the unfortunate people who are trying to defend themselves against the worse excesses of the channel tunnel rail link.

r. MacGregor: We are talking about two different things. In relation to the British Rail reforms, we want competition for the franchises, so we must provide the information to ensure a fair competitive basis on which bids can be made. That will be one of the franchising director's responsibilities.
The second issue raised by my hon. Friend is very reasonable. The people who have over the years acquired the experience and skills to run the railways and who have delivered many of the recent improvements should have the opportunity to bid. In fact, they will have that opportunity and, I believe, to do so in a more attractive way than if they were operating simply as part of the monolithic British Rail structure. The opportunity will arise through management-employee buy-outs. In addition, we want to encourage such buy-outs and, as the House will know, we have arranged for financial assistance up to a limit of £100,000 to be provided to facilitate them.
Therefore, those who have been operating the railways will have opportunities. It is not surprising that we have received 30 expressions of interest; we cannot have bids at the moment, because there is nothing for which to bid. However, I assure the House that, as I have moved around the country, I have met a considerable number of British Rail senior managers—as have my hon. Friend the Minister for Public Transport and the franchising director—who are keen to bid on the basis of a management-employee buy-out. I want them to have the suppprt and backing of British Rail, which will come through the financial assistance, and not have British Rail as a competitor.

Mr. Prescott: I have received notice of a management buy-out seminar, which encourages managements to believe that the moneys available for the buy-outs or for the redundancies that could come with privatisation would be financed from the British Rail pension fund. Will the Secretary of State assure us that that will not be the case?

Mr. MacGregor: The money that would be used for financial assistance for the buy-outs would come from the British Rail pension fund?

Mr. Prescott: Or be used for the redundancies that may occur.

Mr. MacGregor: Yes, I can give that assurance.
I was saying, that I believed that management-employee buy-outs are a more attractive proposition with added benefits, because they enable those who were formerly or are currently working for British Rail to make their bids. Many will form consortia with the private sector, which will bring real advantages.
I have dealt with two of the issues which my hon. Friends have raised with me. I hope that what I have said makes it clear that their fears about both can easily be met and that, in fact, there is a real advantage in turning the experience of those in British Rail into a management-employment buy-out.
There are several key points to the new clause. The purpose of our reforms is to get better passenger services by removing the constraints and bureaucracy of a huge nationalised industry, by adding private sector attitudes, approaches, disciplines, skills and experience to the commitment, skills and experience, of which there is an abundance among many British Rail staff.
It will be achieved by going into the private sector and restructuring passenger services into smaller units. Briefly, they are the ways in which we seek to get better passenger services. We shall not achieve that aim merely by allowing British Rail to bid knowing that it will have huge advantages in framing its bid. I shall deal with that point in a moment.
In relation to private sector involvement, invitations to tender are not only about getting more cost-effective services. Some people have referred to competitive tenders in local authorities as a parallel and said that people working in local authorities have been able to tender for services that they are already running. That was designed to achieve, and has achieved, considerable savings in local authorities by producing more cost-effective services.
We certainly seek savings in the competitive tenders for the franchise—I am confident that we shall get more cost-effective services—but there is another purpose, which is to develop new opportunities and create new markets for passenger services, an opportunity that does not exist in the tendering for local authority services. Those new opportunities are better achieved by going to the private sector.
In our debates I have frequently referred to the important issue of culture change. I continue to be struck by the fact that, when I meet managers who were formerly in nationalised industries and who now operate in the private sector in the same businesses, they frequently say that one of the most striking benefits of the privatisation process has been the culture change of having to operate in the marketplace and not within the public sector. That is why we seek to encourage management-employee buy-outs involving the private sector and to encourage competition with the private sector—management-employee buy-outs mean breaking the habits of a lifetime locked into a nationalised industry, public sector culture.
If the nationalised industry bids against management-employee buy-outs on terms that inevitably favour the nationalised industry, one jeopardises the change of culture.

Mr. Prescott: What about the French railways?

Mr. MacGregor: The hon. Gentleman keeps talking about French railways, but that is not a model that we wish to follow. The TGVs are very effective, but I have two points to put to him. First, many people draw attention to the inadequacies of the French railways, apart from the TGVs, and many pay tribute to our InterCity services. It is not a case of French railways being so much better than ours right across the board.
Secondly, the French taxpayer currently pays £1·3 billion a year to service the colossal debts carried by


SNCF. The equivalent latest figure for British Rail is £81 million, so it is not surprising that France's new Minister for Transport said that the French would have to tackle that problem. It is a heavy burden, and it is questionable whether that is the best use of scarce public expenditure.

Mr. Peter Bottomley: I wonder whether my right hon. Friend would recap so that I could try again to understand why managers who want to make a bid or to propose an even more efficient way of running a service should not be allowed to do so from within British Rail.
My right hon. Friend has convinced the House that it is reasonable to allow managers help to enable them to make a bid from outside BR, but we have not yet fully understood—at least, I have not fully understood—why they should not be able to make a competitive bid from within BR if they think that, within the organisation, they can make a better fist of it than they are allowed to do at present.

Mr. MacGregor: I am not sure whether my hon. Friend means that such people should be allowed to bid while they are still part of BR but as part of an independent management-employee buy-out, or that they should be allowed to bid because they are BR.

Mr. Bottomley: It seems to me that there are three options. The first is that people can leave BR completely and bid from outside. The second is that they can get some kind of help—my right hon. Friend said that up to £100,000 per bid would be available—to enable them to bid as if in future they would not be within BR. The third option would be for managers to be able to say, from within BR, that that is the way in which they would like to run the service within the organisation. I have not yet been able to understand why that third option is excluded, and why such bids cannot be tested against the others.

Mr. MacGregor: Certainly the first two options are clear. People can leave BR; and people can be outside BR once the system is in operation. Managers will be allowed to remain within BR while they make their management-employee buy-out bid, but if the bid is successful, obviously they will have to move to a franchise outside BR.
The real distinction is between those options and the third option. My hon. Friend suggests that BR itself should be allowed to bid for the franchise, as the Opposition want—

Mr. Prescott: He has got it right.

Mr. MacGregor: Of course I have got it right; of course I understand it.

Mr. Prescott: Brilliant.

Mr. MacGregor: Thank you very much.
The third option would mean that people would bid not as a management buy-out or as a separate management, but as part of BR. [HON. MEMBERS: "Hear, hear."] That is precisely why the Opposition want that third option. That is what I have been saying all the way through.
The Opposition want no change. They want BR to be able to manipulate the bids for the individual franchises

—they will not all come at once—so that it will always be able to undercut the competition. The interesting question is how BR can justify the claim that it will carry on as it is under the system, yet will be able to make a bid at a much lower level than it is currently achieving in its financial track record. That is the interesting question.

Mr. Prescott: Yes.

Mr. MacGregor: I am glad that the hon. Gentleman is following me, because we are now coming to the crunch.
The answer to that question is that private sector bidders, including management—employee buy-outs, will make a realistic assessment of the business prospects for each franchise. They will have to, because that will be in the nature of the bid. They will know how much subsidy they will get for the next five years if they are successful, and they will know the risk that they are taking.
They will know that they have to deliver what they believe they can achieve, and run a more cost-effective service according to all the terms of the contract, providing all the services, but at the same time increasing revenue. That is how the benefits will come. If BR were to bid against them—

Mr. Snape: Will the right hon. Gentleman give way?

Mr. MacGregor: Let me finish my sentence.
If BR were to bid against such a bid, it would always tend to make the most optimistic assumptions, believing that, if its forecasts proved unrealistic, somehow or other the taxpayer would be there in the background to bail it out. That is not the way to achieve either the cultural changes or the improvements. That is the fundamental difference, and that is why I cannot accept the amendments.
Furthermore, if it were felt that BR as a whole could bid for each franchise, that would undoubtedly undermine City interest. If BR were allowed to bid on every occasion, there would be a fear that it would be able to undercut every bid by one means or another. That is a crucial difference, and it is the reason why I cannot accept the amendment.

Mr. Nicholas Winterton: My right hon. Friend has talked about the reasons why BR should not be able to bid for a franchise. Will he answer a specific question which he has been asked before in private meetings but to which, so far as I know, he has not yet given a full reply—he has certainly not given me a full reply? Is it not technically possible for the French railways to bid for a franchise within the United Kingdom? My right hon. Friend may say that that is unlikely, or that the French railways has suggested that it does not intend to make a bid, but is it technically possible?

Mr. MacGregor: That is technically possible, but I should stress that the purpose of our policy, as we have made clear, is to introduce private sector management and expertise into the operation of the railways.

Mrs. Gwyneth Dunwoody: rose—

Mr. MacGregor: Will the hon. Lady let me finish?
At this stage, the draft guidance to the franchising director—there will be further drafts, but there will eventually be guidance and instructions to the franchising director—makes it clear that his principal objective will be


to secure as soon as reasonably practicable … that the function of providing passenger railway services in Great Britain is performed by private sector operators".
The franchising director will therefore want to examine most carefully any proposed bid involving a foreign public sector railway operator in order to find out whether that bid will assist him in meeting his primary objective.

Several hon. Members: rose—

Mr. MacGregor: It is for all of those reasons that I believe that the Labour party—

Mr. Hugh Dykes: rose—

Mr. MacGregor: I can answer questions later in the debate. I believe that the Labour party—

Several hon. Members: rose—

Mr. MacGregor: There will be plenty of opportunitiy for my hon. Friends and other hon. Members to make their contributions, and I shall reply later.
The Labour party seeks to perpetuate British Rail exactly as it is now. That is a fundamental difference, and that is why I cannot accept the amendments.

Several hon. Members: rose—

Mr. Dykes: Will my right hon. Friend give way?

Mr. MacGregor: Yes.

Mr. Snape: There are Opposition Members who want to speak.

Mr. Dykes: Does my right hon. Friend agree that the difficulty in his argument is that, both under our national laws and under European Community rules and regulations, SNCF could perfectly legally establish a genuinely private public limited company in Britain—10 per cent. of which would be owned by SNCF, or whatever —which would be able to bid on that basis? Theoretically, could not such a company win all the franchises?

Mr. MacGregor: If SNCF decided to take a 10 per cent. stake in a company that made a bid, it would have to be clear that no state aid was involved in its contribution. Then the company would be able to bid. Presumably such a consortium would involve many United Kingdom participants, including some managers and employees attempting a buy-out. It would be for the franchising director to decide whether such a bid produced the best value for money.

Mr. Snape: rose—

Several hon. Members: rose—

Mr. Snape: I am grateful to the Secretary of State; I presume that he is giving way to me.

Madam Deputy Speaker: Order. May we be clear? Has the right hon. Gentleman concluded his speech, or is he giving way?

Mr. MacGregor: I have finished.

Mr. Snape: We are all left thoroughly confused, Madam Deputy Speaker. I wanted to ask the right hon. Gentleman a question, having watched him bog himself down in that way—it had nothing to do with the French, although I appreciate the dilemma in which questions from his hon. Friends place him.
It seems a strange proposition to say that when it comes to buy-outs managers still within BR will not be allowed to make a bid because their bid would be lower than it would be if those same managers were to mortgage their homes and attempt a management buy-out. I realise that I am no great intellectual in such matters, but I find the Secretary of State's proposition hard to accept intellectually. I should be grateful if he would enlarge on it when he sums up. He does not have a reputation as one of the great ideologues in the Government; he is known more as a number cruncher. I do not know whether he regards that as a compliment or an insult, but when he gives us all that stuff about a monolithic nationalised industry, and talks about the public sector in a derogatory way—

Mr. MacGregor: Indicated dissent

Mr. Snape: That is what the right hon. Gentleman said. Those were the reasons behind his refusal to allow British Rail to bid for any franchises. It is a disgraceful insult to hundreds of thousands of people—managers as well as rank-and-file railway workers—who have spent many years working in the public sector for fairly low pay. Many of the managers have earned lower rates of pay then they might have been able to earn in the private sector. They did so because they felt that there was some public service ethos in running the railway system. For them to be written off and to be described as being part of a monolithic, nationalised industry does the right hon. Gentleman no credit. It is a totally inaccurate way in which to describe the diligent efforts of many thousands of people, including my own father who spent most of his working life on the railway system under both private and public ownership. He did not notice any dramatic change to a monolithic industry. It seems that Conservative central office may be writing the right hon. Gentleman's briefs in this debate because he has trotted out philosophical nonsense as a justification of a policy that. I find incredible.
I do not know whether Conservative Members understand the basis on which railway franchises are to he allocated. I noticed some puzzled looks. The fact that the hon. Member for Harrow, East (Mr. Dykes), among others, had a few things to say and thoroughly confused the Secretary of State suggests that the right hon. Gentleman should go back to the drawing board.
Surely it is a fundamental tenet of Conservative faith that the public sector should bid against the private sector. After all, as we have heard from the Secretary of State, Conservatives believe that the private sector is inherently more efficient. What are they so frightened of? The fact that those with the greatest experience of running the railway industry will be excluded on the spurious ground that they will undercut the private sector will not benefit the consumer, the passenger or the freight user in the long term, even if it were true. There is not a shred of evidence that it is true. To exclude the very people with the experience of running the railway industry goes to show how daft the whole Bill is.

Mr. Nick Hawkins: Surely the whole point of my right hon. Friend's remarks is that the people with experience will not be excluded. They will be encouraged to participate in management-employee buy-outs. What will be excluded will be the monolithic structure. I am glad that the hon. Member for West Bromwich, East (Mr. Snape) has just mentioned the most


important people—the passengers. What we are trying to do in the Bill is to improve customer service. The people who most matter on the railways are the passengers. The railways are not run for the benefit of the employees. To listen to most Opposition Members, one would think that it was only the employees who mattered.

Mr. Snape: The future of a once-great industry should not be decided on the basis of the personal ambitions of a callow youth from Blackpool. We are talking about the dismemberment of a railway industry. Let the hon. Member for Blackpool, South (Mr. Hawkins) think of this. We shall deal with the passengers and the benefits in a moment. Who exactly among the managers who run the railway now will run the railway while all this bureaucratic claptrap is being put together? Does the hon. Gentleman know, as he rushes to defend his own silly piece of legislation, no doubt in the hope of preferment in the future?
The hon. Gentleman is the secretary of the all-party railways group. For him to defend this legislation suggests that at the group's annual general meeting we should have a serious look at his qualifications for the job. My goodness, the sooner he is an Under-Secretary of State at the Department of Health and therefore gagged and prevented from taking part in these debates, the sooner we shall have a bit of common sense brought into them.

Mrs. Dunwoody: Come on. That is a bit much.

Mr. Snape: Perhaps I over-promote the hon. Member for Blackpool, South.

Mrs. Dunwoody: Northern Ireland?

Mr. Snape: My hon. Friend says Northern Ireland—

Madam Deputy Speaker: Order. What has this got to do with the new clause and the amendments under consideration?

Mr. Snape: It has a great deal to do with the fact that those of us who know something about the railway object to the claptrap to which we have had to listen this afternoon, Madam Deputy Speaker. However, if you can contain the hon. Member for Blackpool, South and prevent him from making long interventions, I shall do my best to confine my remarks to the new clause—

Madame Deputy Speaker: Order. I do not enter into bargaining propositions with hon. Members.

Mr. Snape: That is very wise, if I may say so, Madam Deputy Speaker.
Another fallacy peddled by the Secretary of State is that British Rail is the monopoly provider of public services. Where is the monopoly in the railway system? What is the monopoly against internal air services? We have privatised long-distance coach services. We in the United Kingdom are addicted to the company car. Where is the monopoly? This monopoly exists only in the minds of some of the sillier Conservative Members—

Mr. MacGregor: Will the hon. Gentleman give way?

Mr. Snape: I realise that I may have provoked the right hon. Gentleman into rising to his feet by saying that. I hope that this will be a very short intervention.

Mr. MacGregor: The hon. Gentleman has pointed to other methods of transport in which there is competition within and competition between them. There is competition between all of them and within them in the private sector. Why does the hon. Gentleman think that the railways should be the main area of transport that can be run only by a single organisation and in the public sector?

Mr. Snape: I do not think that. That is not what the Bill is about. The Opposition have acknowledged that there is a place for the private sector in the provision of transport. Of course, we have admitted that the state cannot possibly provide everything. The new clause and associated amendments are about giving British Rail under its current structure the opportunity to demonstrate that it can compete against the private sector on, to use an overworked phrase, a level playing field. There is nothing ideological about that. If the right hon. Gentleman is so sure of his facts, he has nothing to worry about because the private sector will win hands down anyway. To avoid facing the fact that there may be managers within the public sector who are every bit as well qualified, if not more so, than their private sector counterparts to make these bids, the right hon. Gentleman has to invent stories about them deliberately undercutting the private sector to preserve their own empires. There is not a shred of evidence for that.
The right hon. Gentleman referred to 30 managers who had already expressed—

Mr. MacGregor: Thirty-five.

Mr. Snape: Thirty five? The figure has gone up already. A note has obviously come from the Box. One of the 35 managers who have expressed an interest wrote to me recently. He told me that he wrote to the Secretary of State saying that he thought that his plans to dismember the railway industry were extremely damaging and that they would have grave long-term consequences for the economy. He said that he received a letter back thanking him for his interest and enclosing all the documents necessary for him to make an application for one of the franchises. If the other 34 managers are like that, the right hon. Gentleman's case becomes even more questionable. From listening to him, I believe that it is pretty questionable already.
Where are the parameters against which the bids are to be measured? There is none if British Rail management are to be excluded from the whole process. The right hon. Gentleman said that the regulator will, of course, look at how much the service costs under the existing British Rail network and will measure the quality of the bids against that cost. That presupposes that one can break up a national railway industry financially into 25 nice little compartments and that one can say that if running trains within one twenty fifth of the railway costs £X million, the franchise should be around £X million. I am not sure how well qualified the right hon. Gentleman is in accountancy. Again, it will be, to say the least, a fairly elastic process if that is how it will be done.
We all know that the franchising director will accept the lowest bid for a particular group of services. I hope that the right hon. Gentleman and the Minister for Public Transport, the faithful Sancho, will agree at least on that.


Let us suppose that there was a bid of £20 million for a hypothetical group of services in the west midlands. Let us suppose that the existing BR managers, whether they had mortgaged their homes or not and whether they had decided to be capitalists rather than railway workers or not, said that instead of a £20 million bid for a half-hour service, they would bid £22 million for a 20-minute service. With their knowledge of the railway industry, they could perhaps do that with one extra unit and with two extra crews. Such a bid would be disqualified under the Bill.

Mr. MacGregor: indicated dissent.

Mr. Snape: The Secretary of State shakes his head. He has already said that if the bid came from within the public sector, it would be disqualified. To throw away all that expertise purely for ideological purposes is nonsense.
I appeal to Conservative Members, many of whom are here today, who have taken an interest in railway matters over the years to tell the Secretary of State that once again he has got it wrong. Not everyone—managers, employees or people in the salaried or wages grades—in the railway industry believes in what the Secretary of State calls an inefficient monolithic organisation. Many believe in the future of the industry to which they have given their lives. It is totally nonsensical and unfair to exclude those railway men and women from the whole tendering process. For that reason, Conservative Members—at least, those who care—should support this group of amendments.

Mr. Hawkins: The concern of those whom I represent, who care about the railways as deeply as I do, is to ensure that the legislation works in practice. The importance of the new clause, and the reason why the Government are right to maintain their position that management and employee buy-out bids should be allowed but British Rail should not be allowed to bid, is that the railways should benefit from the skill and expertise of the people who understand the running of them and who can be encouraged to be involved in management-employee buy-outs. However, there should be every opportunity for customer service to be improved without the danger of the whole purpose of the Bill—to bring in private sector management and skills—being undermined. It will be undermined if, as my right hon. Friend the Secretary of State rightly said, the monolithic British Rail, as it has been for so many years, is allowed to bid in its own right.
Labour Members seek to undermine the whole basis of the bid by allowing British Rail to undercut private competition. That change is unacceptable because it would ensure that all the customer complaints up and down the country about the unacceptable quality of British Rail services continue in the years ahead. We want to see an improved railway service. It is no good hon. Members such as the hon. Member for West Bromwich, East (Mr. Snape) talking about ideology. We are interested in serving the public. It is not possible for Labour Members to ignore the voluble and voluminous complaints that they get, as I get, about the appallingly low quality of many British Rail services. It is simply not acceptable for them to ignore the volume of customer and passenger complaints about so many lines, which have resulted from the mismanagement of so much of British Rail over so many years.
I welcome the fact that, for the first time in a debate on rail —I have been a regular attender of such debates—the hon. Member for Kingston upon Hull, East (Mr. Prescott) said that he accepted that there had been both

management and employee failures in British Rail. One welcomes a sinner who repenteth and a conversion on the road to Damascus, however late it is. It is to be welcomed that at long last there is some acceptance on the part of Labour Members that there have been many things wrong with British Rail in the past. That is why it is so extraordinary that they are still arguing that British Rail should be allowed to bid. That would undermine the whole purpose of what the Government are doing, which is to bring in the fresh air of private sector management to improve customer service. Labour Members will be taken seriously on this issue only when they start talking about the volume of customer and passenger complaints.
I shall refer to a point made by the hon. Member for Hampstead and Highgate (Ms Jackson). She suggested that the Government's response to new clauses tabled this afternoon was the result of pressure from an organisation called Save Our Railways. I have examined carefully the heavily hyped media launch of a Save Our Railways press release issued yesterday, which talks about a number of Conservative Members, including me, and the reaction of the public—in the view of Save Our Railways—in those Conservative seats. When one looks carefully at the press release—clearly, those members of the media who concentrated on it heavily in the past 24 hours did not look at it carefully enough—it makes it clear that 5,300 people in 53 seats were surveyed. The briefest acquaintance with statistics would show that that means that precisely 100 people in each seat were surveyed. That is hardly a statistically significant sample.
The Save Our Railways survey referred to the feelings of a percentage of the people in each Conservative seat. The figures of 79 per cent. and 6 per cent. suggest that a large number of people were surveyed. However, if only 100 people in each seat were surveyed on their views of the various clauses, the figures of 6 per cent. and 9 per cent. show that only six people and nine people respectively were surveyed.
Before the hon. Member for Hampstead and Highgate readily adopts a rail union-funded campaign, which claims to be all-party on the basis only that a single former Conservative Member, however distinguished, was involved in the launch of that campaign, she should examine the survey more carefully. When I look at the figures relating to my seat, I have the endorsement of 79 per cent.—79 of the 100 people surveyed agreed with my views on rail privatisation. That is a ringing endorsement and it is one of the reasons why, at the local elections last week, a rail union councillor was defeated and we won a seat from Labour.

Madam Deputy Speaker: Order. Passing reference is one thing, but to expand it to an entire speech is another. The hon. Gentleman must return more closely to the new clause being debated.

Mr. Hawkins: I am grateful for your guidance, Madam Deputy Speaker. I simply wanted to make the point that, despite the remarks of the hon. Member for West Bromwich, East, 79 per cent. of the people in my constituency who were surveyed by Save Our Railways agreed with me. That is a ringing endorsement of the Government's opposition to clauses such as new clause 24. It is one of the reasons why I support so readily my right hon. Friend's opposition to these suggestions.

Dr. Marek: It is always a tell-tale sign that, when the Secretary of State is on a weak footing, he attacks Labour Members, and he did so on this occasion. He is shaking his head—he should look at the Official Report. During debates on other amendments, perhaps when he was about to give way or he was sure of his ground, he did not attack Labour Members.
The Secretary of State said that the Labour party wants no change. I do not think that any Labour Member holds that view, because we all know that there are problems with the railway system in the United Kingdom—it is grossly underfunded, the rolling stock is old, the capacity to build rolling stock is in doubt unless action is taken and the system is understaffed. Frankly, one wonders how the industry ever gets a train to leave and arrive on time as it does. The staff manage to do that, despite all the handicaps under which they must work.
The Secretary of State said that Labour Members want a large monolithic organisation to continue. I cannot subscribe to that. But I subscribe to the proposition that the railway system is a network, a system and a unity of its own. Wilfully dismembering the system without producing the slightest shred of evidence that the way in which the Government intend to do it is right is not in the interests of the country or of the passengers and customers.
The Secretary of State did not mention the customers or the passengers. I agree that the hon. Member for Blackpool, South (Mr. Hawkins) eventually mentioned them, but the Government Front Benchers certainly did not. The Secretary of State should look at the Official Report tomorrow—and I shall do the same.
Labour Members are worried that, if the changes come about—we can make general speeches on Third Reading —customers and passengers will not be able to undertake journeys from one station to another. Will passengers and customers have the security of knowing that, if they know that they must get up early tomorrow morning to catch the 7 o'clock train to somewhere, the train will run? I admit that trains do not always run on time now, but why add the extra danger that a franchising company that has bid too much or has not produced the figures that it expected when it was first given the franchise will go bankrupt or walk away from the operation at a moment's notice?
If British Rail could bid for franchises, that would keep other franchise operators on their toes. Under the present circumstances, that would not happen. I would go a little further: I believe that there is a certain amount of dogmatic malice on the part of the Government against a nationalised industry such as British Rail and against the people who have run the service. The service has been understaffed and underfinanced. Employees have been attacked by the Government during the 10 years that I have been a Member of Parliament. The Government want to see the end of the nationalised industry and it does not matter to them how that is done. If the country has to suffer, so be it. I am afraid that that is how I look at it. That is why the Government are so keen to ensure that the new clause and amendments in this group are defeated.
6 pm
My hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) has tabled a new clause. I have tabled five amendments in this group. I suggest two ways in which British Rail could be brought into the operation to keep the private operators on their toes. The hon. Member for Ashford (Sir K. Speed) has tabled some amendments in

the group. I hope that the new clause or one of the amendments will be accepted today. Of course, we shall support the new clause tabled by my hon. Friend the Member for Kingston upon Hull, East, if he decides to press it to a vote. I should also be happy to support the amendment tabled by the hon. Member for Ashford.
I am amazed at the lack of information that is sometimes given in the press. The leader in The Independent today is entitled "A concession to speed BR's sale." It talks about two questions and says:
The second of these questions is easier to answer. Far from being the leap into the dark its critics allege, private railways have yielded impressive dividends in Japan, Sweden and elsewhere.
The leader makes no further reference to Japan, Sweden or anywhere else, but it is held up as an answer that the reader of The Independent can accept as the editors's judgment of whether the privatisation proposals are worth anything.
We all know that in Sweden any success that has been achieved has depended crucially on Swedish railways being able to bid. It has been successful in about 79 per cent. of the bids. In many cases, it has turned loss into profit. What is wrong with that? If a national operator that is kept on its toes by private competition can turn lines from loss making into profit making in another country, why does the Secretary of State for Transport intend to prohibit that in the United Kingdom? There is only one answer to that question: it is because of dogma, malice and hatred of public service and public industry.
I wrote down a few comments that the Secretary of State made. He said that he wanted to encourage management buy-outs. There is no difficulty in understanding why he wants to do that: it is because no one else can run the railway industries. So railway managers who have been slated by the Secretary of State in the past few years will suddenly be lauded by him because they will buy out the industry. Suddenly, they have a private entrepreneurial ethos. They will be completely different creatures. It is beyond me to understand why that should be the case and why, if there are constraints on British Rail, the Secretary of State cannot remove them.
I admit that the Secretary of State is removing some constraints—for example, in freight operations. However, he could remove many of the constraints on British Rail without this dreadful Bill. If there were a referendum, I am sure that 90 per cent. of people would vote against the Bill. The Secretary of State also said that he wanted to restructure the industry into small units. If that happens, it will be more difficult for passengers to take a train from one station to another. The smaller the number of units, the more difficulty for the passenger and the customer.
The Secretary of State also said that he wanted a culture change. My thoughts immediately went to the water companies, which are now charging outrageous amounts and cutting off the supply of water from more desperate people and families than ever before. That is the culture that the Secretary of State wants to introduce. He wants to sweep away the idea of public service. That may be possible in other circumstances, but it is not possible for the major, necessary utilities or for transport systems. An integrated national railway service is certainly one of those. Therefore, it should be kept together.
If the Secretary of State were prepared to move some way, I would be prepared to accept that private capital and private interests should be brought in to keep the major provider of the network on its toes, as has happened in


Sweden. Sadly, that will not happen here. It is a great pity. The Secretary of State shows his dogmatic malice by refusing to accept any argument. For the sake of the country—and for the sake of his party, which will reap the rewards if the clause is accepted; but that is not a matter for me—I hope that there are enough Conservative Members who have not clone a deal. I hope that they have not done deals. I have not been party to the negotiations and talks which have been held. I hope that Conservative Members will have sufficient integrity to vote for the new clause or one of the amendments. If they do, it is just conceivable that they can rescue an awful Bill and turn it into one that might work.

Sir David Mitchell: The new clause and amendments would allow British Rail to tender for franchises. I am glad that my right hon. Friend the Secretary of State intends to resist them. At first sight, the case for allowing British Rail to tender is superficially attractive. British Rail has all the resources needed to be a successful operator. It has a world of experience and expertise. It will be a continuing operator in other spheres of the railway service.
However, the new clause and amendments would wreck the Government's purpose. They would fight off most private franchise operators for fear of unfair competition. British Rail would have disproportionate resources and much bigger muscle than any new franchise proposed operator. There is no way in which one could avoid cross-subsidisation between one set of contracts and another in a giant organisation such as British Rail.
I remind my hon. Friends who may be considering supporting the new clause or amendments that one could not persuade potential private franchisers that there would not be artificial competition in a particular bid which it was preparing and spending money on. I am well aware that assurances would be given that the system could be policed, but it could not. I wish to give the House a read-across which illustrates that it would not be possible to iron out and prevent cross-subsidisation.
I ask my hon. Friends to consider what has happened in local government. We all know that there are many examples where in-house bids have been made by local authority departments for contracts which have been put out to competitive tender. In many of those cases there have been artificially cross-subsidised bids. The Department of the Environment has issued 45 notices where it has suspected anti-competitive behaviour in the bidding. So far, it has had to issue 21 directions for either anti-competitive behaviour or failure to achieve financial targets set for the department concerned.
In other words, we have a direct read-across where, in local government, insider bids, so to speak, have resulted in artificial competition. Everybody knows that, if British Rail were allowed to bid in similar circumstances, the same artificial competition would result.

Mr. John Spellar: To me, 21 does not seem to be a bad average when one considers that in this country there are tens, if not hundreds, of thousands of contracts let every day under competitive tendering. To find only 21 with which something is wrong seems very good odds to me.

Sir David Mitchell: I said that, so far, there had been 21. The hon. Gentleman must recognise that it takes quite a

long time for these things to work through the machinery of assessment as to whether, as suspected, an artificial bid has been put in.
Quite apart from the possibility of a deliberate intention to have cross-subsidisation, one has to consider whether British Rail would know whether there were cross-subsidisation. There are a huge number of areas in which there would be opportunity for judgment on the allocation of central overheads and servicing costs; judgment on the period of write-off and how long rolling stock will last. All these matters of judgment will have a considerable impact on the level of the bid put in by British Rail in competition with a private operator.

Mr. Dykes: Why could that not all he handled adequately by the franchising director? Why does my hon. Friend have so little confidence in that operation?

Sir David Mitchell: Simply because, in a vast organisation such as British Rail, it would be possible to hide those costs. Let me give my hon. Friend an example.
When I had the honour of serving as a Minister in the Department of Transport, British Rail came forward with a proposal to close the Settle-Carlisle railway line. We asked British Rail to give us its costs and takings. It was a monumental task to try to unravel the facts and get to basic figures upon which to form a judgment. At one point, British Rail said that it was very sorry, but it could not read the till rolls, so it could not tell us what the takings were.
Against that background, I have to say to my hon. Friend that anybody from outside who seeks to investigate whether cross-subsidisation is going on will not have a snowflake's chance in hell of getting to the bottom of it.

Mr. Harvey: rose—

Dame Elaine Kellett-Bowman: rose—

Madam Deputy Speaker: Mr. Nick Harvey—or is the hon. Gentleman giving way?

Sir David Mitchell: Yes, Madam Deputy Speaker. My hon. Friend wishes to intervene.

Madam Deputy Speaker: I am sorry. I thought that the hon. Gentleman had concluded.

Dame Elaine Kellett-Bowman: We were very delighted that the Minister did not allow the wool to be pulled over his eyes, and the Settle-Carlisle railway survived.

Sir David Mitchell: I will close by saying that this is a very powerful argument, which I hope will be found persuasive by my hon. Friends, for supporting the Secretary of State by resisting this amendment; it would frighten away prospective franchisees from bidding, thus defeating the Secretary of State's purpose.

Mr. Harvey: From time to time, I am asked to explain to people what rail privatisation is all about and how it will work. When I inform them that the only operator in the country with any experience of running the railways is the one body that is explicitly barred from taking part in the franchise competition, they move from concern and doubt to complete astonishment and incredulity. Anyone—a butcher, a baker or a candlestick maker—with no


experience of running a railway, can bid; the only people who are specifically barred are the only people with any experience of running the railway.
The hon. Member for Southend, East (Sir T. Taylor), who is not present, managed, ingeniously as ever, to get the European dimension into this argument, as did the hon. Member for Harrow, East (Mr. Dykes), from a rather different perspective, perhaps. But the fact is that an operator from anywhere in Europe can bid to run these franchises, while our own national railways are debarred from doing so.
What will happen when there is only one bidder? Are the taxpayers not entitled to know that the cost of the franchise or the revenue from it will be preferable from their point of view to what British Rail could have achieved? British Rail, for all its faults, is a success story of a kind. In terms of train kilometres per staff member, it is half as good again as the European average. The Treasury support for it, at 0·14 per cent. of gross domestic product, is less than one quarter of the European average. It has more 100 mph-plus train services than virtually any other European country. The bidding process could improve this further, if the Swedish experience is anything to go by. In Sweden, the acceptance of the national railways' bids has improved the costs by 30 per cent.
The whole idea that management buy-outs are the shape of things to come is nonsense. The picture that we were originally painted by the Secretary of State was that hordes of would-be private operators were being held back at the gates, such was their enthusiasm. But, as this debate has gone on over the months and we have smoked them out and distilled a little more clearly who the people are who have expressed this interest, upon which the hon. Member for West Bromwich, East (Mr. Snape) has already commented, it has emerged that the Government are pinning their hopes at this stage on management buy-outs.
If these teams of managers have to take out second mortgages on their homes and stretch themselves to the limit to pay for the franchise, and then have to lease the rolling stock, where on earth will they find the money to make the investment that everybody realises the railways need to take us into the new century? They will be hamstrung in capital terms, in just the same way as management buy-outs in any other industry have been. They will not have the capital to make the investment that is needed, and they will not have any assets against which to borrow that capital.
The hon. Member for Eltham (Mr. Bottomley) would want to see that the current British Rail operation could be beaten. He wanted them, as the amendment proposes, to put forward a formal tender. I have another amendment, which will come up presently, that looks at similar matters to these. In that, I call for the bidders to have to show that they can beat the projected British Rail operating costs. Supposing operators from abroad—SNCF, or whoever it might be—undercut the bids made by the private sector here: will the Government, for ideological reasons, insist on accepting an inferior bid from a British private sector bidder?
The taxpayer and the National Audit Office have the right to ask serious questions if the bids coming in cannot beat the existing British Rail operating costs, or any bids

that come from a public sector, whichever public sector that might be. At a time when the Chief Secretary to the Treasury is canvassing the possibility of pensioners having to pay for prescriptions, or people having to pay for hospital beds, any suggestion that these franchises should be awarded on the basis of bids that cannot undercut the current British Rail operating costs is completely unacceptable.
Why should the taxpayer have to pay for the ideology of a Government hellbent on pushing these things into the private sector? There may be a market there for the private sector to come in and run railway operations, and there may be not. It will evolve at its own speed. Surely keeping British Rail in the picture as an alternative in each and every case would enable the process to develop at its natural pace. It may be that the market will be able to take on the network over the next 20 or 30 years, but the Government are hellbent on doing it much more quickly.
Keeping British Rail in the picture, making it quote for running the service and insisting on behalf of the taxpayer that anyone else must beat that would be the best way of running the system.

Sir Keith Speed: This is an interesting debate, which goes to the heart of the Bill. When my right hon. Friend responded, he described some of my fears and those of some of my hon. Friends, but he did not deal with them all.
I have a worry, which has been echoed on both sides of the House, that management buy-outs, excellent though they are—and I entirely support them—may run into financial problems. I am sure that there will be corporate plans and very good people. As hon. Members on both sides of the House have said, British Rail managers are very good, and I am sure that they would make a good fist of a management buy-out. However, if there is not the finance, and we are talking about seven-figure financing at least for most of these franchises, there could be real problems.
I heard the powerful argument by my hon. Friend the Member for Hampshire, North-West (Sir D. Mitchell), but perhaps I could take it a stage further. If British Rail is not allowed to bid up front at the start, his fears about frightening off management buy-outs and the private sector will have been addressed.
Let us take the London-Tilbury-Southend line, where, as I understand it—my hon. Friend the Minister for Public Transport will correct me if I am wrong—from 1 April next year there will be a form of shadow franchise by British Rail which will provide a yardstick against which the director of franchises will be able to judge the bids. Let us also assume that either one or two bids come in that are nothing like as good as British Rail, or no bids come in at all.
My hon. Friend the Minister referred to such a possibility in reply to the hon. Member for North Devon (Mr. Harvey) in Standing Committee on 2 March, when he said:
I agree with the hon. Gentleman for North Devon in what was clearly a useful debate, which helped my understanding of what might happen in 1994. The franchising director should take into account the prospective results of the lines to be franchised. At the end of the day, the franchising director will be accountable to the NAO and the PAC for achieving value for money. The bid that he accepts will have to be compared with what the public sector British Rail would have cost the taxpayer to provide a comparable


service. That is a reasonable point which I have accepted." —[Official Report, Standing Committee B, 2 March 1993; c. 506.]
So far so good; if we have either unsuitable bids or no bids, the service goes back to British Rail.
However, what is there to give the management and staff the motivation to say, "Now we have this faute de mieux, we have to make a really good fist of it, because we have seen off the private sector or they are not interested"? We also have to consider the stability of the line and the services, so that services are not cut and fares do not go rocketing up.
It is important that we at least devise a formula so that, without a shadow franchise or open bidding, where the private sector is unable or unwilling to take on a line, rather more motivation should be given to the people who made it possible—the managers and staff of that region.
If my hon. Friend could address that point in a way that will make sense, presumably through the franchise director, some of us might be more easy. Otherwise it appears to me that, whatever happens, we are being ideological, and, at the end of the day, like many hon. Members who have spoken, I want a better rail system, particularly for the passengers, and the right motivation for the staff so that they can improve still further where they have the opportunity.
In that spirit, when my hon. Friend winds up, I hope that he will be able to address not only those fears, but the real opportunities that exist for British Rail.

Mr. Hugh Bayley: I start by declaring an interest: I am sponsored by the RMT union, but I speak on behalf of my constituency and all its rail employees. York is above all else a railway town. Until some four years ago when the BREL carriageworks were privatised, British Rail was the city's biggest employer by a considerable margin. Even now, one in 12 of the work force in my constituency work in the rail industry. either for British Rail of for ABB Transportation Ltd.
The proposals in the Bill are likely to affect my constituency, my constituents and the prosperity of the city I represent as much as any other city in the country. At the moment, York is the headquarters location of two of British Rail's 10 zones. Within York itself, Regional Railways North-East employs 630 people; 400 of them are employed in the headquarters operation, so their jobs quite literally are on the line. If they are unable to make a bid to preserve their own jobs, they will have to take their luck with whoever it is, private sector operator or managment buy-out, that wins the franchise.
The other zonal headquarters is the InterCity east coast main line headquarters which employs 1,400 people. It is a highly successful railway, something I wish those on the Conservative Front Bench would acknowledge without equivocation. The Government's franchising consultation and information document pointed out that the east coast main line made a profit of £220 million in the last year for which we have figures, a major achievement for any railway, public or private, and one which should not be just written off as a public sector incompetence that needs to be replaced by private sector initiative, if one is to believe the Conservative rhetoric, at the earliest opportunity.
Despite building up the east coast main line into a highly successful and profitable service, the employees who have achieved that will not be allowed to bid for the business that they have built. The question, "Why not?"

has been asked by a number of Conservative Members. The only reason that the Secretary of State can give is that he does not believe that within the public sector there is the right attitude or culture to allow for the running of a successful rail service, despite one which is a showpiece for the whole of Europe having come about under British Rail's public sector management.
If the Secretary of State believes, as I am sure he does because he would not have proposed the Bill and taken it this far if he did not, that competition will improve the performance, the quality and the cost of rail services in Britain, he should go for competition. He should let British Rail compete with allcomers. He has hardly been knocked over in the rush by private sector operators desperate to run rail services. If he does not allow British Rail to compete, in many cases he will have only one single bidder, one insider management buy-out bid. They will know that they are the only people running after the franchise, they will know that they are in a monopoly position and they will not have to put in a competitive bid. Who will have to pay the additional costs of running a service which has been won on franchise without there being any competition?
One need look only at the ITV franchise bids to see that television companies which knew that they were up against competition had to make multi-million pound bids to win the franchise, whereas one, Central Television, discovered that it was the only competitor, bid —2,000 and got the franchise. That is not in the public interest in television terms, and it will not be in the travelling public's interest in railway terms.
The staff working for British Rail, my constituents, do not want a silver spoon in their mouths. They simply want a chance to bid so that they can continue doing the jobs that they are now doing. They believe that they can provide a better service more cheaply for the passengers than can anyone else. I urge the Government to put that to the test.
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The Secretary of State says that British Rail cannot be allowed to bid because it might undercut the competition. In whose interest could it possibly be for a lower price not to go in for the same service? British Rail is not, as is suggested, a huge, bureaucratic, monolithic whole. It has already, with its organising for quality initiative, split itself into separate businesses that account financially for their activities in a businesslike way.
If BR puts in a bid that is too low and it loses money, it will be under the same financial pressures as any private sector bidder. It would be absurd for BR, having won a bid, to come cap in hand to the Government and expect them to respond in any way different from the way that the Government would respond to Stagecoach, Sea Containers or any other company that underbid. The company in question would have to live with the financial consquences of a bad business decision. That is what the framework of the Bill is intended to achieve, and there is no reason why it should not apply equally to private and public sector entrepreneurs.
Why allow, on the east coast main line, Richard Branson, Stagecoach, National Express Coaches or any other company to bid but not BR? The only answer seems to be that given by the Secretary of State this afternoon


—that he is afraid of public sector competition. The right hon. Gentleman shakes his head in dissent. Let him test his theory in practice and allow BR to bid.
The same should apply to Regional Railways North-East. It is not a profit-making railway, but it provides a good public service at low cost. It is possible that another company could provide a better public service railway at lower cost. The Bill says that that must be tested by a competitive franchise bid. If there is to be competition, let BR put in a bid in its own right. If the Secretary of State does not allow that to happen, he will never know whether he has been sold a pup by the private sector franchise bidder which wins the franchise, because he will not have seen that bidder operate against the full range of competition.
York city council recently commissioned a firm of transport consultants, a company which has become a household name during the consideration of the Government's privatisation proposals, to undertake some work. It commissioned Steer Davies Gleave to examine the employment implications of the Government's proposals on York. It concluded that, of the present 4,700 railway employees in York, privatisation would put 2,400 BR and ABB jobs at risk and would put 1,400 additional jobs locationally at risk.
In other words, if, for example, the winner of the Regional Railways North-East franchise were to decide to locate its headquarters in the constituency of my hon. Friend the Member for Morley and Leeds, South (Mr. Gunnell), those other jobs would not be lost to the country but would be lost to the city of York. We are speaking not simply of British Rail jobs that would be going. Netted off against the figures are the private sector jobs in York.
The proposals would have a devastating effect on the economy of York. What does the Secretary of State think that that is doing for the morale of railway employees in my constituency? The result of debarring BR from bidding to continue running railway services against the competition will, I suspect, be that the best staff will progressively leave BR and go through management buy-outs or be head-hunted by private companies. They will leave and the expertise in running rail services that resides in those people will be lost to BR.
The rump of British Rail will be left with a lower quality of leadership, management and perhaps even a lesser quality of engineering expertise. Yet the rump of British Rail will be expected to step in and save the railways when the franchise-winning private sector companies fail. British Rail will be expected to retain the expertise to save the Secretary of State's face if and when there is a private sector franchise failure. That is a possibility which the right hon. Gentleman must face.
I meet regularly senior railway managers in my constituency. I assure the Secretary of State that there is no great enthusiasm for management and employee buy-outs. If it must happen, it will happen, but it will happen with a heavy heart because the people who have built up and managed the railway services, with their headquarters in York, want to carry on running them. If they have no other option, they will take the plunge, but they feel loyal to their present company. Why should that loyalty be chucked aside? Why should the staff and the team not continue to run the railway that they have built up into the excellent east coast main line?
On the international front, the Secretary of State said that there was nothing in practice to stop SNCF or the

Belgian or German railways from bidding for a British railway franchise. Perhaps when local government refuse services were privatised people did not expect French companies to come in and scoop up the business. But they did, and while the Secretary of State says that he does not expect public sector railway companies from other EC states to come in and scoop up franchises, he acknowledges that that could happen because they have the right to do so.
Where is the sense in allowing some less efficient European public sector railway operators to bid for franchises when highly efficient British Rail managers who have built up showpiece services are denied that opportunity? Indeed, if what is proposed is approved, I would expect it to be challenged in the courts under the rules of the single European market. I hope that judgment would go in favour of creating a real single market with a level playing field in which British Rail could compete against the competition on equal terms.
On that basis, if British Rail could provide a better deal for the travelling public it would win, and if it provided a poorer deal, it would lose. That is provided for in the Bill, so it is a right that should go to British public sector railway companies in the same way as it will be going to foreign public sector railway companies.
The position in Sweden bears examination because it is the only other country that has done what the British Government are proposing, namely, splitting the operation of track and infrastructure from the operation of trains. Track and infrastructure in Sweden remain in public hands, as is proposed for Britain under Railtrack, with independent operators bidding to run services. Nine out of 10 franchises have gone to Swedish state railways, but with cost savings to the public purse of about 30 per cent.
The Government have said that the whole point of privatisation is to inject competition so that there is no monopoly—one set of rail managers will have to bid against another. Whoever puts together the best deal, in terms of quality and the cost to the travelling public, will get the work. That is all we are arguing for. Let us forget the rhetoric about trying to leave British Rail unchanged. We may have differing opinions on that, but we recognise that the Bill will go through. For goodness sake, let us give the BR managers who have built the east coast main line and competitive regional services such as Regional Railways NorthEast the opportunity to carry on doing the job that they have been doing.

Mr. Dykes: I shall be brief, partly because I was not a member of the Standing Committee—a fact that I know will be greeted with enthusiasm in Scotland. Nevertheless, I have some important points to make.
My hon. Friend the Member for Ashford (Sir K. Speed) should be credited with our gratitude for making some helpful suggestions and with the skill with which he has tabled amendments which we enthusiastically support. I also congratulate him on the dignified and intelligent way in which he has handled the campaign in the media.
There has been a lot of interest in this subject, in part due to both a sentimental and an objective feeling about our late lamented colleague, Robert Adley, who knew so much about the railways. He was both a lover of the railways and a great expert in the nitty-gritty of the railways. The Government would be right to think meticulously about the importance of making concessions,


partly for this reason. It is not enough on its own, however, despite the eminence and skill of our former colleague, who was widely respected inside and outside the House.
The Select Committee recommendations which our late lamented colleague produced with others amounted to a masterly series of suggestions for the Department of Transport. I am sorry if I sound naive—I probably always do—but it is quite wrong that Governments should always feel obliged to regard Select Committees as pestilential nuisances to be resisted at all costs. To think in that way is absurd and immature.
My right hon. Friend the Secretary of State has often been credited not only with being courteous to the House but with other qualities. We sympathise with him, because we suspect that he is taking this legislation through with limited enthusiasm—particularly for the part of the Bill that excludes British Rail. I and many others fear that we are still living with the tail end of the Thatcherite Centre for Policy Studies era, which has given us so many of these bizarre ideas.
However, in my Adjournment debate on 14 May I urged on the Government second thoughts about privatisation and deregulation—I was not referring to a bonfire of controls either. My fears in this respect were allayed by the excellent response that I received from my hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh); who replied to the debate on behalf of the DTI by saying that the Government were not run by the Centre for Policy Studies. I was so moved by that truthful admission that I immediately realised that the Secretary of State for Transport was the ideal man to accept intelligent amendments to the legislation, including our amendment No. 57.
My right hon. Friend is entitled to be irritated, as we are, by the fact that the lead amendment in this group takes the form of an Opposition new clause. I hope, however, that that will not rule out intelligent consideration of these matters and that he will be persuaded seriously to consider accepting amendment No. 57. I believe that my hon. Friend the Member for Ashford has not gone far enough with his appealing arguments that try to meet some of the Government's objections to British Rail being given an equal role in bidding for franchises.
I must declare a general interest at this point, although it is wholly different from that declared by the hon. Member for York (Mr. Bayley). I am a founder shareholder of a City financial and communications company which, over the years, has been involved in most of the privatisations, together with other City institutions, the Treasury and Departments of State. Although this country has effected more privatisations than any other, I believe that enough can be enough. There is no shame for a Government in saying that we have come to the end of the privatisation period and that they will think twice before making any more such proposals.
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These days I am only a passive shareholder in the company—I have no executive role in it—although my wife is an executive employee. The company may be involved in giving advice to the Treasury, the Government and the Department of Transport on this proposal. It is not a privatisation in the conventional sense, and for that we are grateful. It aims to bring in franchising and to grant certain companies the franchises in question. That being

so, I find it illogical and offensive that British Rail should be excluded. The illogicality of the situation has emerged in our debate, and I believe that BR must be reincluded.
Perhaps we could go for a compromise mechanism. My hon. Friend the Member for Ashford mentioned the problem of the motivation of BR management and employees if they are left in charge of some lines, areas or routes. British Rail would not necessarily bid on the same basis as management/employee buy-outs, and such employee buy-outs too must also be considered, and as private applicants. We would welcome them. There is general agreement about that. British Rail, however, should be allowed to be a bidder on the same basis as everyone else, bearing in mind the tremendous improvements that it has made in its operations and management, despite having been underfunded for years by a malevolent and mean Treasury. [Interruption.] I have said that often enough in the past; it is hardly a new utterance. If British Rail were permitted to bid as part of a segmented approach—its regions or local departments, as representing BR, might be entitled to bid—that might be one way around the difficulty.
In a recent article in "The House Magazine" I mentioned the late lamented Member for Christchurch, and what I had to say bears repetition. I said that Robert Adley and his Committee colleagues
had already begun in the form of sensible advice to the Government on BR legislation. How nice it would be if just for once a Government could be seen to be really listening to the sagacious counsel that can come from select committees, instead of always resisting them".
Members of the Select Committee and Opposition Members, if they were all obliged, however reluctantly, to accept this legislation, as amended in Committee and on Report, would probably agree that the single most important area in which the Government's mind had to be changed was this one: the exclusion of British Rail. I hope that my right hon. Friend can bring himself to reverse that tonight, perhaps by allowing localised components of British Rail, not British Rail as a whole, to bid. If he can, he will generate enormous gratitude on both sides of the House. He will not lose face; this is the new era of moderate conservatism, and a change of mind would fit in well with the return to Cabinet government and a listening Government. I hope that he will meet some of the legitimate objections that have been expressed by Conservative Members.

Mr. MacGregor: I will reply briefly to some of the points, because I know that we have a great deal more to do tonight.
The hon. Member for West Bromwich, East (Mr. Snape)—who is not in the Chamber—accused me of basing my opinion of culture changes on some ideological material from Conservative central office. That is not the case. It is based on talking to a great many business men and people who have been through the process of changing from the nationalised industries to the disciplines of the marketplace in the private sector. Time after time, I have met representatives of companies and organizations—PowerGen, National Power, British Airways, BAA and Eastern Electricity, to name but a few, and many representatives from the transport world such as long-distance coach companies—and they have told me that they have seen the benefits very clearly. It is one of the crucial reasons why we believe that the structure that we are proposing for British Rail will secure better services for


passengers and freight customers. My hon. Friend the Member for Ashford (Sir K. Speed) and I have talked through these matters and he has a very good understanding of them. Like my hon. Friend, I am not taking an ideological approach, in a political sense. What I am seeking is a system that will provide better services and better opportunities for staff.
Taking my hon. Friend's example of the LondonTilbury-Southend line, he is right that the starting point will be that a shadow franchise will demonstrate the track record and financial results of British Rail's current operations. Many Opposition Members tend to think that the only way to improve the railways is to pour in huge amounts of taxpayers' money. The London-Tilbury-Southend line is a good example of where better management is already yielding better services. With the extra investment that has recently been agreed, it will be able to build on that. My hon. Friend is right: it is on the basis of an operating record under the shadow franchise that bids can be judged. That will be the yardstick.
Let us take a hypothetical example and assume that the franchising director concludes—this may well not be the case—that the bids that he has received from the private sector do not give good value for money compared with the operating performance of London-Tilbury-Southend. He may decide not to grant a contract to any franchisee. It may also be that the management have decided not to bid for a management-employee buy-out at that time, for a number of reasons, but would like to do so in the future when they think that they might be able to make a better bid. My hon. Friend is right in identifying as one of the difficulties the possible demotivation of the existing management if they felt that another bid from someone else could come through within three months. I think that we are in a dynamic situation and that there will be all sorts of different circumstances in the franchises as we gradually move them around the country.
There has been some misinterpretation in the press of my announcement yesterday. I want to make it clear, yet again, that, although we have announced all 25 potential franchises, we have also said that these will be gradually undertaken. This is a gradual process of franchising, as I made clear in the debate yesterday.
I certainly do not wish to set a condition meaning that, for some time in the future, management and employees in, say, the London-Tilbury-Southend line could not bid for a management-employee buy-out, which might well be what they really wanted to do. I do not think that a clause or amendment could be constructed to deal specifically with my hon. Friend's point, but I accept it nevertheless: motivation for existing management and the stability of the operation are both very important in circumstances such as those that he described.
My hon. Friend has raised the point in discussions with me and I have discussed it with my special adviser on franchising, who I hope will become the franchising director. He entirely agrees with my hon. Friend that this is an important point for him to take into account. I suggest that I give the franchising director guidance and instructions under clause 5, placing weight on the need to ensure motivation for existing management and the stability of the operation. I do not want to be stuck with the specific wording; obviously, we shall have to consider

the wording very carefully. I assure my hon. Friend, however, that we shall produce a second draft of the guidance and instructions before the end of our parliamentary debates.
Let me tell my hon. Friend the Member for Harrow, East (Mr. Dykes) that, in my experience, the findings of Select Committees are not always resisted. If I am convinced that someone else has had a good idea, I will certainly take it on board. If my hon. Friend looks at the many recommendations in the Select Committee report, he will see that about four fifths of them have been accepted by the Government or, indeed, were met before final publication of the report. Of course, we disagree with some of them: the crucial one relates to vertical integration. I cannot go into it now, but there are good arguments on both sides.
We have accepted many of the Select Committee's recommendations. Yesterday, for instance, I based my remarks about the remaining franchises on exactly the approach that it had recommended. In paragraph 419, the Committee expressed the following view on the issue that we are now debating:
There is a case for allowing BR, as well as individual groups of managers, to bid for franchises.
I have explained why I cannot accept that case. However, the report continues:
At the least we recommend that the level of subsidy required by BR to operate a particular service should be weighed against any other franchise bids received.
We have made it clear that that will be—in the words of my hon. Friend—a yardstick.
My hon. Friends the Members for Blackpool, South (Mr. Hawkins) and for Hampshire, North-West (Sir D. Mitchell) made telling and powerful speeches. I know that my hon. Friend the Member for Saffron Walden (Mr. Haselhurst), who was a member of the Select Committee and was very much involved in our discussions, wanted to be present. I am sure that he would have made similar points about, for example, unfair competition, the disproportionate resources that British Rail would have and the huge disincentive for other bidders.

Mr. Dykes: I would be grateful—as, I am sure, would others—if my right hon. Friend would answer the point about British Rail being allowed to bid, not as a single national organisation but on a localised structural basis.

Mr. MacGregor: I have explained why I cannot accept bids from British Rail as a single national organisation and my hon. Friend the Member for Hampshire, North-West explained tellingly how difficult it would be to accept them on any other basis. I prefer to follow the points raised by my hon. Friend the Member for Ashford.
We are talking about encouraging existing employees —management and staff—to participate in the bidding process. We are encouraging them to take the opportunity to continue to do the job. Of course, the new franchisees, having been selected, would want to employ and give new opportunities to many employees and of course the provisions of the Transfer of Undertakings (Protection of Employment) Regulations 1981 will apply. We are encouraging existing management-employee buy-outs. We want British Rail to establish an operating record against which bids should be judged: that means putting it to the test. We want to improve passenger services through a new structure—and that is what the Opposition are trying to prevent.

Mr. Wilson: In the previous debate the Secretary of State gave something. We might disagree about how much he gave and whether it justified the withdrawal of the Tory new clause, but I do not quibble about what Tory Members did. In this case it is much more clear-cut because the Secretary of State has given nothing. Therefore, the position is clear for those who put their names to the new clause and, I should have thought, also for those who signed the report of the Select Committee, chaired by our late lamented colleague.
In answer to the point made by the hon. Member for Harrow, East (Mr. Dykes) about the irritation of voting on a new clause tabled by the Opposition rather than an amendment tabled by Tory Members, we would have been happy if the vote had been on a Government new clause, but to ensure that there was a debate and that the issue was voted on, we tabled a new clause which in substance, content and spirit is no different from amendments tabled by Tory Members.
7 pm
As to the point about other state railways being allowed to bid, the Secretary of State blustered over it but essentially could not deny it. He is legislating for circumstances in which the French state railway, the Belgian state railway and the Irish state railway will be able to operate services in Britain. The only European state railway which will not be able to tender for the services is the British state railway. I find it very odd that a Secretary of State in a United Kingdom Government should legislate in that way.
If the French state railway starts to run services into the heart of rural England, I am sure that the hon. Member for Harrow, East at least will join me in the hope that points such as Stafford and Southend will be included in the network. What an extraordinary thing for a British Government to legislate for. They cannot legislate against other state railways, but they are prepared to do so against their own, out of prejudice and spite.
We went to the heart of the debate when the hon. Member for Eltham (Mr. Bottomley) stood up in genuine puzzlement and said that he could not understand why it should be possible for private companies to bid or for management buy-outs to take place, yet British Rail is not to be allowed to bid as an entity. The classic exercise in prevarication from the Secretary of State, as he shuffled around for his notes to find out how that was to be explained, told us more than anything he said.
Eventually the right hon. Gentleman came up with two explanations: in summary, first, British Rail would be the lowest bidder and, secondly, the City would be deterred. Those are not convincing explanations. The Government want competition. Having gone through the exercise, if British Rail was the lowest bidder, would not that be a plus? Having regard to what the Government want to do, would not it be an advantage? British Rail would have to compete. It would have to prove itself the most competent and cheapest operator. The disciplines of competition would be imposed upon it and passengers would get the best possible service from among the bidders. What is wrong with that in the opinion of the Tory party, never mind the Opposition? Yet that option is to be closed, specifically because it would result in the terrible evil of British Rail winning by being the cheapest and most efficient.
The second reason was that the City would be deterred from investing in potential buy-outs because it would be constrained by the fact that there would be a cheaper bidder. In other words, the calculations of investors will not be based on the market or on competition, but on what they can get away with bidding for franchises in the absence of the most competitive alternative bidder. What a set of criteria on which to dispose of national assets.
As to the alibi on management buy-outs, every Opposition Member agrees that if privatisation is to go ahead there should be attempts at management buy-outs. There is very little enthusiasm for them, but in many places the second last thing that people who have given their lives to the service of the railway want to see is the legislation going ahead. The last thing they want is that people with no previous connection with the railway and no experience of it should walk past them to take over what they have built up and their jobs.
Inevitably, management buy-outs will be prepared and expressions of interest will be screwed out of managers in every area. The idea that there is a positive will for management buy-outs throughout the BR network is a fallacy. The Conservative party brief to its members told them to say that 30 management buy-outs bids were in course of preparation. They have had to retreat from that because it is untrue. The figure of 30 applies not to bids in preparation, for which the figure is zero, but to expressions of interest, which includes even that of Brian Scott in Great Western, who said specifically that he would not be interested unless there was vertical franchising. Having scraped together all the expressions of interest, the Conservative party misrepresented them as bids in course of preparation.
There are three essential reasons why the management buy-out argument fails. The first is out of a sense of duty which should be felt on the Tory side to people who have worked within the public sector industry. Why, in order to participate in the brave new future, should managers, perhaps with young families and many responsibilities, have to mortgage their homes and get into debt? Why cannot they continue to act through the public service provided by British Rail?
The second argument is that buy-outs are not for ever. Indeed, they can last for only a short time before being bought out again, so that we end up with straightforward privatisation. Many analogies have been drawn with the bus industry. I can quote a recent one in Scotland where Citylink bus company, the main arterial operator, which was the product of a management buy-out two and a half years ago for a bargain basement price, has been sold to a private operator to produce a monopoly. So in many cases management buy-outs do not last. They are bought out and become part of the private sector, with the result that many people who were involved originally and who gave their lives to the service are no longer involved. That is another argument against the management buy-out alibi.
Thirdly, management buy-outs would lead to fragmentation of railways. While privatisation is a daft policy, fragmentation is a dangerous and potentially destructive one. The Government's determination to break up an integrated network into dozens of companies, to separate track from operators and then to separate those who are operating on the track, is the truly destructive aspect of the legislation. It is not addressed through the so-called solution of management buy-outs.
If French and Belgian railways can bid, let us speak for Britain. British Rail should be allowed to bid because it is likely to be the lowest bidder and the most experienced and efficient operator. If anything in Tory philosophy runs counter to that, it will be expressed in the Division Lobby. Let us put Britain first and let us support the right of British Rail to bid. Let us prevent the fragmentation of the railways on the basis of political dogma, with services being run by people who have no experience or qualifications to do the job.
My hon. Friends and I, as well as some Tory Members, are fighting for the railways. If the legislation is passed and things go wrong, it is not to the Opposition alone that Tory Members will have to answer but to their constituents who, in overwhelming numbers, are opposed to and concerned about the destruction of British Rail for ideological reasons. Let the Government give us investment in the railways rather than ideology. That is the message from the country which should be listened to now and reflected in the Division Lobby.

question put,That the clause be read a Second time:—

The House divided:Ayes 290, Noes 309.

Division No. 281]
[7.8 pm


AYES


Abbott, Ms Diane
Clwyd, Mrs Ann


Adams, Mrs Irene
Coffey, Ann


Ainger, Nick
Cohen, Harry


Ainsworth, Robert (Cov'try NE)
Connarty, Michael


Allen, Graham
Cook, Robin (Livingston)


Alton, David
Corbett, Robin


Anderson, Donald (Swansea E)
Corbyn, Jeremy


Anderson, Ms Janet (Ros'dale)
Cousins, Jim


Armstrong, Hilary
Cox, Tom


Ashton, Joe
Cryer, Bob


Austin-Walker, John
Cummings, John


Banks, Tony (Newham NW)
Cunliffe, Lawrence


Barnes, Harry
Cunningham, Jim (Covy SE)


Barron, Kevin
Cunningham, Rt Hon Dr John


Battle, John
Dafis, Cynog


Bayley, Hugh
Dalyell, Tam


Beckett, Rt Hon Margaret
Darling, Alistair


Beggs, Roy
Davidson, Ian


Beith, Rt Hon A. J.
Davies, Bryan (Oldham C'tral)


Bell, Stuart
Davies, Rt Hon Denzil (Llanelli)


Benn, Rt Hon Tony
Davies, Ron (Caerphilly)


Bennett, Andrew F.
Davis, Terry (B'ham, H'dge H'l)


Benton, Joe
Day, Stephen


Bermingham, Gerald
Denham, John


Berry, Dr. Roger
Dewar, Donald


Betts, Clive
Dixon, Don


Blair, Tony
Dobson, Frank


Boateng, Paul
Donohoe, Brian H.


Boyce, Jimmy
Dowd, Jim


Boyes, Roland
Dunnachie, Jimmy


Bradley, Keith
Dunwoody, Mrs Gwyneth


Bray, Dr Jeremy
Dykes, Hugh


Brown, Gordon (Dunfermline E)
Eagle, Ms Angela


Brown, N. (N'c'tle upon Tyne E)
Eastham, Ken


Bruce, Malcolm (Gordon)
Enright, Derek


Burden, Richard
Etherington, Bill


Byers, Stephen
Evans, John (St Helens N)


Callaghan, Jim
Ewing, Mrs Margaret


Campbell, Mrs Anne (C'bridge)
Fatchett, Derek


Campbell, Menzies (Fife NE)
Field, Frank (Birkenhead)


Campbell, Ronnie (Blyth V)
Fisher, Mark


Campbell-Savours, D. N.
Flynn, Paul


Canavan, Dennis
Forsythe, Clifford (Antrim S)


Cann, Jamie
Foster, Rt Hon Derek


Chisholm, Malcolm
Foster, Don (Bath)


Clapham, Michael
Foulkes, George


Clark, Dr David (South Shields)
Fraser, John


Clarke, Eric (Midlothian)
Fyfe, Maria


Clarke, Tom (Monklands W)
Galbraith, Sam


Clelland, David
Galloway, George





Gapes, Mike
Mallon, Seamus


Garrett, John
Mandelson, Peter


George, Bruce
Marek, Dr John


Gerrard, Neil
Marshall, David (Shettleston)


Gilbert, Rt Hon Dr John
Marshall, Jim (Leicester, S)


Godman, Dr Norman A.
Martlew, Eric


Godsiff, Roger
Maxton, John


Golding, Mrs Llin
Meacher, Michael


Gordon, Mildred
Meale, Alan


Gould, Bryan
Michael, Alun


Graham, Thomas
Michie, Bill (Sheffield Heeley)


Grant, Bernie (Tottenham)
Michie, Mrs Ray (Argyll Bute)


Griffiths, Nigel (Edinburgh S)
Milburn, Alan


Griffiths, Win (Bridgend)
Miller, Andrew


Grocott, Bruce
Mitchell, Austin (Gf Grimsby)


Gunnell, John
Molyneaux, Rt Hon James


Hain, Peter
Moonie, Dr Lewis


Hall, Mike
Morgan, Rhodri


Hanson, David
Morley, Elliot


Hardy, Peter
Morris, Rt Hon A. (Wy'nshawe)


Harman, Ms Harriet
Morris, Estelle (B'ham Yardley)


Harvey, Nick
Morris, Rt Hon J. (Aberavon)


Hattersley, Rt Hon Roy
Mowlam, Marjorie


Henderson, Doug
Mudie, George


Heppell, John
Murphy, Paul


Hill, Keith (Streatham)
Oakes, Rt Hon Gordon


Hinchliffe, David
O'Brien, Michael (N W'kshire)


Hoey, Kate
O'Brien, William (Normanton)


Hogg, Norman (Cumbernauld)
O'Hara, Edward


Hood, Jimmy
Olner, William


Hoon, Geoffrey
O'Neill, Martin


Howarth, George (Knowsley N)
Orme, Rt Hon Stanley


Howells, Dr. Kim (Pontypridd)
Parry, Robert


Hoyle, Doug
Patchett, Terry


Hughes, Kevin (Doncaster N)
Pendry, Tom


Hughes, Robert (Aberdeen N)
Pickthall, Colin


Hughes, Roy (Newport E)
Pike, Peter L.


Hughes, Simon (Southwark)
Pope, Greg


Hutton, John
Powell, Ray (Ogmore)


Illsley, Eric
Prentice, Ms Bridget (Lew'm E)


Ingram, Adam
Prentice, Gordon (Pendle)


Jackson, Glenda (H'stead)
Prescott, John


Jackson, Helen (Shef'ld, H)
Primarolo, Dawn


Jamieson, David
Purchase, Ken


Janner, Greville
Quin, Ms Joyce


Johnston, Sir Russell
Radice, Giles


Jones, Barry (Alyn and D'side)
Randall, Stuart


Jones, Ieuan Wyn (Ynys Môn)
Raynsford, Nick


Jones, Lynne (B'ham S O)
Redmond, Martin


Jones, Nigel (Cheltenham)
Reid, Dr John


Jowell, Tessa
Rendel, David


Kaufman, Rt Hon Gerald
Richardson, Jo


Keen, Alan
Robertson, George (Hamilton)


Kennedy, Charles (Ross, C&S)
Robinson, Geoffrey (Co'try NW)


Kennedy, Jane (Lpool Brdgn)
Robinson, Peter (Belfast E)


Khabra, Piara S.
Roche, Mrs. Barbara


Kinnock, Rt Hon Neil (Islwyn)
Rogers, Allan


Kirkwood, Archy
Rooker, Jeff


Leighton, Ron
Rooney, Terry


Lestor, Joan (Eccles)
Ross, Ernie (Dundee W)


Litherland, Robert
Ross, William (E Londonderry)


Livingstone, Ken
Rowlands, Ted


Lloyd, Tony (Stretford)
Ruddock, Joan


Llwyd, Elfyn
Salmond, Alex


Loyden, Eddie
Sedgemore, Brian


Lynne, Ms Liz
Sheerman, Barry


McAllion, John
Sheldon, Rt Hon Robert


McAvoy, Thomas
Shore, Rt Hon Peter


McCartney, Ian
Short, Clare


Macdonald, Calum
Simpson, Alan


McFall, John
Skinner, Dennis


McGrady, Eddie
Smith, Andrew (Oxford E)


McKelvey, William
Smith, C. (Isl'ton S & F'sbury)


Mackinlay, Andrew
Smith, Rt Hon John (M'kl'ds E)


McLeish, Henry
Smith, Llew (Blaenau Gwent)


Maclennan, Robert
Smyth, Rev Martin (Belfast S)


McMaster, Gordon
Snape, Peter


McNamara, Kevin
Soley, Clive


Madden, Max
Spearing, Nigel


Mahon, Alice
Spellar, John






Steel, Rt Hon Sir David
Wareing, Robert N


Steinberg, Gerry
Watson, Mike


Stevenson, George
Wicks, Malcolm


Stott, Roger
Wigley, Dafydd


Strang, Dr. Gavin
Williams, Rt Hon Alan (Sw'n W)


Straw, Jack
Williams, Alan W (Carmarthen)


Taylor, Mrs Ann (Dewsbury)
Wilson, Brian


Taylor, Rt Hon John D. (Strgfd)
Winnick, David


Taylor, Matthew (Truro)
Wise, Audrey


Thompson, Jack (Wansbeck)
Worthington, Tony


Tipping, Paddy
Wray, Jimmy


Turner, Dennis
Wright, Dr Tony


Tyler, Paul
Young, David (Bolton SE)


Walker, Rt Hon Sir Harold



Wallace, James
Tellers for the Ayes:


Walley, Joan
Mr. Peter Kilfoyle and Mr. Jon Owen Jones.


Wardell, Gareth (Gower)





NOES


Ainsworth, Peter (East Surrey)
Coombs, Simon (Swindon)


Aitken, Jonathan
Cope, Rt Hon Sir John


Alexander, Richard
Cormack, Patrick


Alison, Rt Hon Michael (Selby)
Couchman, James


Amess, David
Cran, James


Ancram, Michael
Currie, Mrs Edwina (S D'by'ire)


Arbuthnot, James
Curry, David (Skipton & Ripon)


Arnold, Jacques (Gravesham)
Davies, Quentin (Stamford)


Arnold, Sir Thomas (Hazel Grv)
Davis, David (Boothferry)


Ashby, David
Deva, Nirj Joseph


Aspinwall, Jack
Devlin, Tim


Atkins, Robert
Dickens, Geoffrey


Atkinson, David (Bour'mouth E)
Dicks, Terry


Atkinson, Peter (Hexham)
Dorrell, Stephen


Baker, Rt Hon K. (Mole Valley)
Douglas-Hamilton, Lord James


Baker, Nicholas (Dorset North)
Dover, Den


Baldry, Tony
Duncan, Alan


Banks, Matthew (Southport)
Duncan-Smith, Iain


Banks, Robert (Harrogate)
Dunn, Bob


Bates, Michael
Durant, Sir Anthony


Batiste, Spencer
Eggar, Tim


Bellingham, Henry
Elletson, Harold


Bendall, Vivian
Emery, Rt Hon Sir Peter


Beresford, Sir Paul
Evans, David (Welwyn Hatfield)


Biffen, Rt Hon John
Evans, Jonathan (Brecon)


Blackburn, Dr John G.
Evans, Roger (Monmouth)


Body, Sir Richard
Evennett, David


Booth, Hartley
Faber, David


Boswell, Tim
Fabricant, Michael


Bottomley, Peter (Eltham)
Fenner, Dame Peggy


Bottomley, Rt Hon Virginia
Field, Barry (Isle of Wight)


Bowden, Andrew
Fishburn, Dudley


Bowis, John
Forman, Nigel


Boyson, Rt Hon Sir Rhodes
Forsyth, Michael (Stirling)


Brandreth, Gyles
Forth, Eric


Brazier, Julian
Fowler, Rt Hon Sir Norman


Bright, Graham
Fox, Dr Liam (Woodspring)


Brooke, Rt Hon Peter
Fox, Sir Marcus (Shipley)


Brown, M. (Brigg & Cl'thorpes)
Freeman, Roger


Bruce, Ian (S Dorset)
French, Douglas


Budgen, Nicholas
Fry, Peter


Burns, Simon
Gale, Roger


Burt, Alistair
Gallie, Phil


Butcher, John
Gardiner, Sir George


Butler, Peter
Garel-Jones, Rt Hon Tristan


Butterfill, John
Garnier, Edward


Carlisle, John (Luton North)
Gill, Christopher


Carlisle, Kenneth (Lincoln)
Gillan, Cheryl


Carrington, Matthew
Goodlad, Rt Hon Alastair


Carttiss, Michael
Goodson-Wickes, Dr Charles


Cash, William
Gorman, Mrs Teresa


Channon, Rt Hon Paul
Gorst, John


Churchill, Mr
Grant, Sir Anthony (Cambs SW)


Clappison, James
Greenway, Harry (Ealing N)


Clark, Dr Michael (Rochford)
Greenway, John (Ryedale)


Clarke, Rt Hon Kenneth (Ruclif)
Griffiths, Peter (Portsmouth, N)


Clifton-Brown, Geoffrey
Grylls, Sir Michael


Coe, Sebastian
Hague, William


Congdon, David
Hamilton, Rt Hon Archie (Epsom)


Conway, Derek
Hamilton, Neil (Tatton)


Coombs, Anthony (Wyre For'st)
Hampson, Dr Keith





Hanley, Jeremy
Mills, Iain


Hannam, Sir John
Mitchell, Andrew (Gedling)


Hargreaves, Andrew
Mitchell, Sir David (Hants NW)


Harris, David
Moate, Sir Roger


Haselhurst, Alan
Monro, Sir Hector


Hawkins, Nick
Montgomery, Sir Fergus


Hawksley, Warren
Moss, Malcolm


Hayes, Jerry
Needham, Richard


Heald, Oliver
Nelson, Anthony


Heath, Rt Hon Sir Edward
Neubert, Sir Michael


Heathcoat-Amory, David
Newton, Rt Hon Tony


Hendry, Charles.
Nicholls, Patrick


Hicks, Robert
Nicholson, David (Taunton)


Higgins, Rt Hon Sir Terence L.
Nicholson, Emma (Devon West)


Hill, James (Southampton Test)
Norris, Steve


Hogg, Rt Hon Douglas (G'tham)
Onslow, Rt Hon Sir Cranley


Horam, John
Oppenheim, Phillip


Hordern, Rt Hon Sir Peter
Ottaway, Richard


Howard, Rt Hon Michael
Page, Richard


Howarth, Alan (Strat'rd-on-A)
Paice, James


Howell, Rt Hon David (G'dford)
Patnick, Irvine


Howell, Ralph (North Norfolk)
Patten, Rt Hon John


Hughes Robert G. (Harrow W)
Pattie, Rt Hon Sir Geoffrey


Hunt, Rt Hon David (Wirral W)
Pawsey, James


Hunt, Sir John (Ravensbourne)
Peacock, Mrs Elizabeth


Hunter, Andrew
Pickles, Eric


Hurd, Rt Hon Douglas
Porter, Barry (Wirral S)


Jack, Michael
Porter, David (Waveney)


Jackson, Robert (Wantage)
Portillo, Rt Hon Michael


Jenkin, Bernard
Powell, William (Corby)


Jessel, Toby
Rathbone, Tim


Johnson Smith, Sir Geoffrey
Redwood, John


Jones, Gwilym (Cardiff N)
Renton, Rt Hon Tim


Jones, Robert B. (W Hertfdshr)
Richards, Rod


Jopling, Rt Hon Michael
Riddick, Graham


Kellett-Bowman, Dame Elaine
Rifkind, Rt Hon. Malcolm


Key, Robert
Robathan, Andrew


Kilfedder, Sir James
Roberts, Rt Hon Sir Wyn


King, Rt Hon Tom
Robertson, Raymond (Ab'd'n S)


Knapman, Roger
Robinson, Mark (Somerton)


Knight, Mrs Angela (Erewash)
Roe, Mrs Marion (Broxbourne)


Knight, Greg (Derby N)
Rowe, Andrew (Mid Kent)


Knight, Dame Jill (Bir'm E'st'n)
Rumbold, Rt Hon Dame Angela


Knox, David
Ryder, Rt Hon Richard


Kynoch, George (Kincardine)
Sackville, Tom


Lait, Mrs Jacqui
Sainsbury, Rt Hon Tim


Lamont, Rt Hon Norman
Scott, Rt Hon Nicholas


Lang, Rt Hon Ian
Shaw, David (Dover)


Lawrence, Sir Ivan
Shaw, Sir Giles (Pudsey)


Legg, Barry
Shephard, Rt Hon Gillian


Leigh, Edward
Shersby, Michael


Lennox-Boyd, Mark
Skeet, Sir Trevor


Lester, Jim (Broxtowe)
Smith, Sir Dudley (Warwick)


Lidington, David
Smith, Tim (Beaconsfield)


Lightbown, David
Soames, Nicholas


Lilley, Rt Hon Peter
Speed, Sir Keith


Lloyd, Peter (Fareham)
Spencer, Sir Derek


Lord, Michael
Spicer, Sir James (W Dorset)


Luff, Peter
Spicer, Michael (S Worcs)


Lyell, Rt Hon Sir Nicholas
Spink, Dr Robert


MacGregor, Rt Hon John
Spring, Richard


MacKay, Andrew
Sproat, Iain


Maclean, David
Squire, Robin (Hornchurch)


McLoughlin, Patrick
Stanley, Rt Hon Sir John


McNair-Wilson, Sir Patrick
Steen, Anthony


Madel, David
Stephen, Michael


Maitland, Lady Olga
Stern, Michael


Malone, Gerald
Stewart, Allan


Mans, Keith
Streeter, Gary


Marland, Paul
Sumberg, David


Marlow, Tony
Sweeney, Walter


Marshall, John (Hendon S)
Sykes, John


Marshall, Sir Michael (Arundel)
Tapsell, Sir Peter


Martin, David (Portsmouth S)
Taylor, Ian (Esher)


Mates, Michael
Taylor, John M. (Solihull)


Mawhinney, Dr Brian
Taylor, Sir Teddy (Southend, E)


Mayhew, Rt Hon Sir Patrick
Temple-Morris, Peter


Mellor, Rt Hon David
Thomason, Roy


Merchant, Piers
Thompson, Sir Donald (C'er V)


Milligan, Stephen
Thompson, Patrick (Norwich N)






Thornton, Sir Malcolm
Wells, Bowen


Thurnham, Peter
Wheeler, Rt Hon Sir John


Townend, John (Bridlington)
Whitney, Ray


Townsend, Cyril D. (Bexl'yh'th)
Whittingdale, John


Tracey, Richard
Widdecombe, Ann


Tredinnick, David
Wilkinson, John


Trend, Michael
Willetts, David


Trotter, Neville
Wolfson, Mark


Twinn, Dr Ian
Wood, Timothy


Vaughan, Sir Gerard
Yeo, Tim


Waldegrave, Rt Hon William
Young, Sir George (Acton)


Walker, Bill (N Tayside)



Waller, Gary
Tellers for the Noes:


Ward, John
Mr. Sydney Chapman am Mr. Timothy Kirkhope.


Wardle, Charles (Bexhill)



Watts, John

Question accordingly negatived.

Sir John Stanley: On a point of order, Mr. Deputy Speaker. Yesterday, the House had an extended debate on fares in relation to amendment No. 237. Winding up, my hon. Friend the Minister said:
The amendment was selected relatively late. I assure him that, before we come to amendments Nos. 239 and 244, which relate to much the same issues, my right hon. Friend the Secretary of State and I will reflect on the debate. We look forward to answering the points and, I hope, satisfying our right hon. and hon. Friends tomorrow with appropriate assurances."—[Official Report, 24 May 1993; Vol. 225, c. 678.]
I should be grateful if you, Mr. Deputy Speaker, would confirm that it will be open to my hon. Friend the Minister of State, in the context of the debate on amendment No. 109, to fulfil the assurance that he gave yesterday and to respond with the outcome of the considerations that he and my right hon. Friend the Secretary of State gave to amendment No. 237.

Mr. Deputy Speaker (Mr. Michael Morris): The Minister can certainly address the broad issues involved.

Clause 2

RAIL USERS' CONSULTATIVE COMMITTEES

The Minister for Public Transport (Mr. Roger Freeman): I beg to move amendment No. 109, in page 2, line 28, leave out
'for the purposes of this Part'.

Mr. Deputy Speaker: With this, it will be convenient to discuss also the following amendments: No. 239, in clause 64, page 69, leave out lines 33 to 41.

No. 240, in page 69, line 41, at end insert 'or—
(iii) the differential between the rates at which different classes of fare are charged for comparable services operated by the franchisee or franchise operator, and the Board;'.

No. 241, in page 69, line 41, at end insert 'or—
(iii) the differential between the average level of fares charged by the Board or any subsidiary of the Board for any class or description of passenger or in respect of any class or description of passenger service and the average level of equivalent fares charged under franchise agreements'.

No. 242, in clause 65, page 71, leave out lines 12 to 20.

No. 243, in page 71, line 20, at end insert 'or-
(iii) the differential between the rates at which different classes of fare are charged for comparable services operated by the franchisee or franchise operator, and the Board';'.

No. 244, in page 71. line 20, at end insert 'or-

(iii) the different between the average level of fares charged by the Board or any subsidiary of the Board for any class or description of passenger or in respect of any class or description of passenger service and the average level of equivalent fares charged under franchise agreements'.

Mr. Freeman: This is a technical amendment, but grouped with it are others relating to important issues to which, with the leave of the House, I hope to respond later.
Amendment No. 109 is the only Government amendment in the group, and it is required to extend the role of the consultative committees beyond part I. The need for it is predicated on amendments made in Committee, to widen and emphasise the committees' important role.
The amendment will permit committees to discharge duties—for example, under section 56 of the Transport Act 1962 in respect of local railways such as the Tyne and Wear metro and the Manchester metro link. I am sure that the amendment has the broad agreement of both sides of the House, but I shall seek to say more later in response to points that I anticipate from my right hon. and hon. Friends.
I will first respond specifically to issues that were raised in relation to amendment No. 237. You said, Mr. Deputy Speaker, that broad comments would be in order. My right hon. Friend the Secretary of State and I considered that amendment, which was selected for debate but not for a vote. We assure the House, and specifically my right hon. Friend the Member for Tonbridge and Mailing (Sir J. Stanley) and others of our right hon. and hon. Friends who associated themselves with his remarks, that we accept their arguments.
We undertake to reflect further on them and to bring forward an appropriate amendment in another place, which can be debated there and then return to this Chamber as a Lords amendment.
That amendment should embody four principles. First, a duty should be imposed on the franchise director in respect of fares, and clause 5 is probably the most appropriate point for that to be introduced.
Secondly, there should also be a duty in relation to fares exercised through the franchising agreement. My right hon. Friend understands that some services will run outwith the franchising arrangements, but, as my right hon. Friend the Secretary of State has already announced, it is the intention that existing railway services throughout Great Britain will be subject to franchises. Therefore, the agreements into which the franchising director will enter will cover all services.
Thirdly, that duty should cover not just services where there is a monopoly but also cases in which it is not possible to identify services as purely monopolistic. My right hon. Friend and I understand concerns that, even with those services subject to full competitive pressures, such as some InterCity services, the operator—perhaps unwisely and incorrectly—will seek to increase fares, and that would cause concern to passengers. In a competitive market, the operator would undoubtedly lose passengers. However, I confirm that third principle.
Finally, as to the criteria that the franchising director should use in including in agreements provisions relating to fares, we accept that the director himself should be under an obligation to care for the interests of passengers, using his own judgment of what is a reasonable level of fares.
I may be able to respond later in the debate particularly to amendments that are not in the Government's name but to which I anticipate I will be able to respond positively and favourably.
I repeat the assurance that we will return to the point with an amendment in another place that I hope will meet the four criteria to which reference was made in the debate. Although the amendment is not actually for debate, I hope that that will satisfy my right hon. and hon. Friends.

Mr. Wilson: We have listened with interest to the Minister's comments. This is the third debate today in which Ministers have responded to amendments moved not only by Labour Members but by Conservative Members.
Although the Bill's structures are being left intact—Labour believes that the Bill is fundamentally flawed and that it will come to grief in the end—the statements that the Minister of State and the Secretary of State have made today, if acted on, will have a major effect.
The franchising director is being given extraordinary powers. We heard earlier that the franchising director will impose conditions for concessionary fares. That enormous responsibility is being transferred to the franchising director. We now hear—I make no complaint about it, but welcome it—that the franchising director will have the power to regulate fares on both franchised and non-franchised services.
That is all very well if it is loosely in line with what the right hon. Member for Tonbridge and Mailing (Sir J. Stanley) was saying last night or with the objections of other Conservative Members, including the hon. Member for Southend, East (Sir T. Taylor), but it leaves the question of where the money will come from. That is the next stage of the debate. The debate does not end when the legislation is enacted.
If we can take at face value the assurances that are being given—that fares will be controlled by the franchising director and that the existing structure of concessions for at least the three named categories will be imposed by the franchising director—we are certainly not talking about a free market in railways or market forces. We are talking about a substantially more regulated railway than we have at present. I do not complain about that, but it strikes me as odd logic in Tory policy, as constrained by the understandable objections of Conservative Members.
Whether it will work out like that is another question. The crunch will come—perhaps in 1995—when a franchisee says, "It's impossible. We entered this with good will, but the subsidy is not high enough. We need to raise fares by 25 per cent. to get a reasonable return." According to the Minister—I was pleased to hear it—the franchising director's duty will be to say, "No, you're not. You will increase fares by what I allow." Presumably he will take account of what the Government tell him, some of the political pressures prevailing at the time and a range of other circumstances.
I assure Ministers that every Opposition Member will ensure that the franchising director is known to the public as a creature of Government and not an independent spirit. The franchising director will have to take tough decisions. He will have to tell franchisees, "Yes, you can increase fares by 25 per cent.", in which case the

opprobrium will fall on Ministers; or, "The rate of inflation is 5 per cent. so you are getting only 7·5 or 10 per cent."
At that point, the franchisee will say, "If I am getting only 10 per cent., I still cannot make ends meet, so I shall withdraw X number of services, and what are you going to do about that, Mr. Franchising Director?" Such situations will arise sooner rather than later.
It has been explained to the Minister time and again, primarily in the context of the Department of Transport's own document on bus privatisation in the mid-1980s, that the Government cannot create monopolies under a franchise system and have any realistic hope of controlling them. What the Government set out to do was to create private monopolies under the guise of franchises, and not control them.
For months in Committee and throughout our debates, we have heard that there will be no need to control franchisees because the invisible hand of the market will work wondrously for the Government. It has been argued that concessionary schemes or fares and a control mechanism for fares are not necessary, because the market will sort it all out.
Today, we have witnessed a spectacular reversal in Government policy, because such matters will now be controlled not by the market but by the franchising director. That is the beginning of the Government's troubles rather than the end of them. They have had to yield to the proper concerns of Conservative Members, which Opposition Members have been expressing for months.
The important point is that the Government have yielded. We now have it in black and white, and it will be written into the regulations and the record of our debates, that the franchising director will be responsible for functions and for setting fares.
The franchising director is the creature of Government. When the inevitable conflict arises between franchisee and franchising director, and the franchising director is faced either with the possibility of losing the franchisee or yielding to his demands, we shall return to this debate and say, "It is not the market's fault; it is not the franchising director's fault; it is not the franchisees' fault; it is the fault of the people who put all this in place to start with."

Sir John Stanley: I begin by warmly welcoming the significant policy statement that my hon. Friend the Minister of State made at the beginning of the debate. He said for the first time in our proceedings on the Bill that the Government have accepted the principle of reasonableness in relation to fares and franchised routes and that it should be written into the legislation.
Secondly, the Government have accepted—again, for the first time in our proceedings—that the franchising director should be responsible for fares. Thirdly, they have accepted the important point that the franchising director's duty on fares should apply not merely to the so-called monopoly routes but to routes generally—in other words, right across the country.
That represents three very significant policy shifts, which I welcome, but all three points were embodied in amendment No. 237, which my hon. Friends and I tabled and which was debated yesterday. The slightly niggling, gnawing question at the back of my mind is the revised wording of amendment No. 237 that my hon. Friend the Minister will propose. I have much faith in my hon. Friend


and I wait with interest to see what he proposes. I earnestly hope that the amendment will not water down the clear impression that he has given the House today about the important policy points that he has now accepted.

Mr. Prescott: It was indeed a significant statement by the Minister of State because it finally did away with the pretence that the market will apply. Previously, supply and demand determined price, but now the franchising will do so. The hon. Member is concerned about reasonableness, so does he believe that, if the franchise operator is not prepared to work at a price because he believes that he cannot make the required profit, it is reasonable to expect good old British Rail to operate at the same price?

Sir John Stanley: I am speaking to the amendment in relation to fares, but my answer to the hon. Gentleman is that British Rail is working on a different financial basis. Routes that remain in British Rail's hands will have access to Government subsidy, which may not be the case for franchised routes.
I deal now with this group of amendments, in particular the four tabled by my colleagues and I—Nos. 239, 241, 242 and 244. It may be helpful if I explain that the four amendments have a single common purpose and then why we have tabled four. The common purpose is to ensure that the new statutory bodies created under the legislation to look after the interests of the consumer have the ability to deal with the central issue of fares.
The four amendments should be regarded as two pairs —Nos. 239 and 242 should be taken together. Amendment No. 239 deals with the central committee and No. 242 with the regional committee. They would remove any inhibition or limitation on the ability of the consultative committees to consider fares. The second pair of amendments—Nos. 241 and 244—are slightly more narrowly drawn and would enable the consultative committees, both central and regional, to consider the differential between the level of fares on franchised and non-franchised routes.
The second pair was tabled against the possibility that the first pair was not selected because the first pair was debated in Committee and therefore risked not being selected. As both pairs have been selected, I shall speak to amendments Nos. 239 and 242, the first pair, which would provide much the best arrangements for consumers and ensure that nothing in the Bill could in any way constrain the ability of the consultative committees to consider fares.
We are debating this policy from what I regard as an eccentric start in the initial print of the Bill. The Bill sweeps away all existing consultative committees and replaces them with major new committees—the national body with the singularly grandiloquent title of the Central Rail Users Consultative Committee, and its nine satellites, the regional consultative committees. They are the bodies, above all others, to which the consumers will have to look to safeguard their interests in all aspects of rail travel.
I find it extraordinary that, the new bodies having been created, they are debarred from involvement in the issue that is possibly of most concern to consumers or the rail travelling public—the level of fares. On Second Reading I drew attention to clause 65(2) which achieves that. It states:

Nothing in subsection (1) above shall entitle a consultative committee to investigate any matter relating to…arges made for any service or for the use of any railway facility".
We are left in the extraordinary position of creating new bodies to look after consumers' interests, but debarring them by law from having any involvement in the scrutiny of fares.
To their credit, my right hon. Friend the Secretary of State and my hon. Friend the Minister of State have gone some way to modify the situation. They did so in Committee and have now conceded that the consultative bodies should have some involvement in fares. However, although the principle is conceded in the Bill, it has not been conceded in relation to all fares. The consultative bodies can examine special and discounted fares, but not the generality of fares. We are faced with the absurd situation in which it is possible for the committees to examine fares for the disabled but not the able bodied, and fares for the very old or the very young but not the middle aged, and here I declare an interest. The types of fares that can be considered are divided into fish and fowl—ome can be considered and some cannot.
The purpose of amendments No. 239 and 242 is simple. They would sweep away the remaining prohibition and enable the important consumer protection bodies to consider the generality of fares. I urge my right hon. Friend and the Minister of State to accept them. My right hon. Friend has conceded the principle and I hope that he will now be bold and brave, accept the logic of what happened in Committee and allow the consultative bodies to examine all fares without limitation.

. David Rendel: It is pleasant on what is only my second speech in the House to be able to agree with much of what has been said by Conservative Members. I believe that this group of amendments goes to the heart of privatisation. To my mind, whether or not one agrees with it, privatisation passes power from the community to the shareholder. Some of us will support that and some will not but, whatever we think, when power is passed from the community to the shareholder, it is crucial that the watchdogs that look after community interests should be strengthened, not weakened. I believe that that is why the amendments have been tabled.
There are two main failings in the suggestions about the way in which the consultative committees will work. As I understand it, the consultative committees can comment on such vital issues as whether the snow in winter is or is not of the right sort for the rail service, but they cannot comment on issues that most users might think rather more important. I am thinking in particular of fares, which have already been mentioned, and the possible cutting of services.
I shall deal first with the cutting of services and wish to comment in particular on the fact that one of the main worries in my community is that the fast, long-distance trains running between London and the west country, some of which currently stop in our community, may not do so in the future. The franchisees may decide that it is more profitable to run such trains straight through to the west country without stopping at stations such as Reading, Thatcham and Newbury. Clearly, that would be to the disadvantage of the people whom I have come here to represent, and I have no doubt that the same problems


face other communities. It is therefore important that the consultative committee that will look after the interests of my constituents and others has the opportunity to comment and to ensure, if possible, that such cuts do not happen.
The second issue of prime importance is the level of fares. If there is no train at all, one cannot use the rail service, but, if the train is too expensive, one may also not be able to use the rail service. Therefore, the question of fares is crucial to all rail users. Clearly, the user representatives should be able to comment on the comparisons between charges made by various franchisees and British Rail for the same service. That is why my colleagues have tabled amendments Nos. 240 and 243, and I shall speak to them on their behalf.
If we cannot make such comparisons between the levels of charges in different parts of the country, we will lose a significant right in terms of the representations that can be made to the powers that be.
The right of committees to comment is also being circumscribed, and I believe that it should be strengthened. In particular, their reports must not be restricted in any way; they should be published openly and be as widely available as possible. That is what gives the committees the powers that they need. If the amendments are not accepted, the watchdogs that we now have are in danger of being emasculated. They should be strengthened; they should not be turned into the Government's poodle.

Mr. John Horam: I welcome what my hon. Friend the Minister for Public Transport said about fares, and I hope that he will elaborate further in his concluding remarks. I also welcome what my right hon. Friend the Secretary of State said about concessionary fares and travelcards. We all know how important those are in London, and I am very pleased with the concessions the Government have made today.
My question arises from my hon. Friend the Minister's introductory remarks, in which he referred to yesterday's debate and elaborated three new principles that he wanted the franchising director to take into account. My question is simple: what is the standing of the franchise agreement? I presume that all the details of any particular franchise agreement will be fully in the public domain and the public will know exactly what it will contain. The logic of the Government's position, as I understand it, is that any franchise agreement will initially be based on the existing services, schedules and performance targets for an area. Therefore, surely there can be no commercial secrecy about exactly what is involved in the agreement. It will be a matter of open record, against which the performance of the franchisee will be judged. That is an important consideration, and I should like my hon. Friend to comment on it and to tell me, for the record, whether I have understood it correctly.

Dr. Marek: Amendment No. 237 was tabled by the right hon. Member for Tonbridge and Mailing (Sir J. Stanley). It is important that when the Government table an appropriate amendment in another place—as they said they would—the phrase "reasonable to consumers" is always borne in mind. It is vital that the word "passengers" or "consumers" should accompany the word "reasonable", because we can use that word in all sorts of other senses.
If the Government now accept that principle—I welcome that prospect—it cuts the ground from under their feet regarding their argument in Committee, when they refused to let the consultative committees talk about fares, except in a restricted sense. It is true that the Government moved a little, but they should now think again. Fares will no longer be left to the open market and, therefore, be outside the vires of any consultative committee, because the franchising director will now decide an upper limit for what is reasonable. Therefore, it should be within the powers of the consultative committees to pronounce on the subject.
I hope that the Government do not resist the amendments. If they do, they will have to explain carefully why, having resisted them in Committee on the ground that the market rather than any consultative committee would decide such matters, they have now accepted the amendment tabled by the right hon. Member for Tonbridge and Mailing which says that the franchising director rather than the unfettered market will decide. The Government will have either to accept the amendments or use a completely new and different argument as to why they should not be accepted.

Mr. Mark Wolfson: I warmly welcome the commitment by my hon. Friend the Minister to give the franchising director the clear additional powers over fares, and I look forward to the amendment that will return to the House following the debate in the House of Lords on the issue. Yesterday when we debated the issue I said in an intervention that in rail privatisation we lacked an individual who was comparable with regulators in other privatisations, in his role concerning price control. I hoped that Ministers would respond to what was said yesterday and increase the opportunity for the franchising director to play a full part in the setting of fares, and I entirely welcome the movement from Ministers today.
I also wish to support the other two amendments tabled by my right hon. Friend the Member for Tonbridge and Mailing (Sir J. Stanley), which deal with the involvement of the national and regional consultative committees and their ability to comment on and to have an input into fare levels. My right hon. Friend was right to say, especially in view of the amendments made in Committee to allow the consultative committees to have a say on special fares of various kinds, that it was illogical that they were not allowed to comment—indeed, they were positively disbarred by law from commenting—on the fares that most people would pay. I therefore support the amendments and I look to my right hon. and hon. Friends to respond positively to the pleas of the House.

Mr. Peter Bottomley: We are discussing Government amendment No. 109, which would leave out the words
for the purposes of this Part
from subsection (2). Yet subsection (4)(a) states that
subsections (2) and (3) above and subsections (6) to (8) below
do not apply. I do not ask my hon. Friend the Minister to answer my question now, but will he consider whether that really means what the Government want it to mean? Subsection (3) seems to refer to the fact that there
shall be one consultative committee for Scotland and one for Wales,
whereas subsection (4) says that
the London Regional Passengers' Committee shall be treated as the consultative committee for…London',


and will not therefore be appointed by the regulator. That is a slightly technical point, and maybe the Government have got it right, but I should like them to check before the provision goes to another place.
I have tried to avoid making this point too often in the House, but as the representative of people in my constituency who use the trains in London, I must emphasise that the rail service into London is one of the most vital services for people in Eltham, as for many others, especially in south London. My constituents are interested in their existing services being, maintained, and preferably not deteriorating, as is happening on Sundays. They also hope that there is a reasonable prospect of services improving. Better rolling stock—that is coming. More reliability—that may come. More capacity—that will come if the Thameslink 2000 improvements outside London Bridge and Borough market take place. Those prospects may not fall entirely within the amendments, but my constituents are keenly interested in them.
I have a slight worry on the fares issue. I appreciate that one does not want to constrain franchise holders too much, but I ask myself why, if they will be able to go in for market pricing, I bothered to help write into Bills governing fares at the Elizabeth bridge at Dartford on the M25 provisions to stop exploitation there. Why did we devise a complicated system for approving fare increases on the Severn bridge, for example, where market pricing would have allowed scalping? I do not believe that the franchise holders will want to go in for scalping on rail services, and my right hon. Friend the Member for Tonbridge and Mailing (Sir J. Stanley) has done well to bring the issue directly to the attention of my right hon. and hon. Friends. I hope that the assurances given will be satisfactory to him. They will be greatly reassuring to my constituents. We look forward to seeing how far amendments Nos. 239 and 242 are duplicated by the Government's proposals in another place.

8 pm

Mr. Freeman: I shall seek further advice on the point made by my hon. Friend the Member for Eltham (Mr. Bottomley). I hope to communicate information to my hon. Friend during the evening. If he is not satisfied with the response, he will doubtless have an opportunity to raise the matter a little later in our proceedings. If he is satisfied, I shall write to him on the point.

Mr. Peter Bottomley: indicated assent.

Mr. Freeman: I am grateful to my hon. Friend.
My hon. Friend the Member for Orpington (Mr. Horam) spoke of the status of the franchise agreement. I have given a commitment on behalf of my right hon. Friend the Secretary of State that we shall publish a further draft of the objectives of the franchising director while the Bill is still before Parliament. My right hon. Friend gave that commitment again earlier today. We have also said that a further draft of the model franchise agreement, an earlier draft of which was tabled in Committee, will be available to Parliament. Certain amendments to that model franchise agreement were suggested in Committee. The hon. Member for Cunninghame, North (Mr. Wilson) suggested that that might be appropriate before the ScotRail franchise was

proceeded with. I accepted in Committee that it would be helpful to look at the headings in a typical franchise agreement, although the specific franchise agreement for a particular route will contain commercially confidential information. Undoubtedly, much of that information will become available because the agreement will deal with punctuality, reliability, the safety of services and the cleanliness of trains. That information will be in the public domain.
I know that my hon. Friend the Member for Orpington is a member of the Public Accounts Committee. It will not be surprising if the Public Accounts Committee takes a great deal of interest in the early franchises. I look forward to supplying information from the Department of Transport on the subject of franchising which is appropriate and needed by Parliament.
My right hon. Friend the Member for Tonbridge and Mailing (Sir J. Stanley) spoke to amendments Nos. 239 and 242. He understands that they are important amendments because they would permit the consultative committees to comment on any aspect of fares. Under the Bill at present, the ability of the consultative committees to comment is related to the structure and relativity of fares, but not to specific fares on specific lines. The thrust of the amendments is to give the consultative committees that right. The committees are, of course, very interested in fare levels and proposed fare increases, and they have not hidden their views under a bushel. They have obviously expressed their views.
We are happy to accept the text of amendments Nos. 239 and 242. They do not cover the London regional passengers committee. I understand that my right hon. Friend the Member for Tonbridge and Mailing may not have been able to pick up the fact that we have dealt with the LRPC at a different point in the Bill. The reason for that is that the appointments and the size and responsibilities of that committee are different. I give my right hon. Friend a clear assurance that, because we have accepted the text of the two amendments, we shall re-table them in another place with the appropriate extension to cover the LRPC, which will make the amendments effective. I cannot be clearer in the assurance that I give my right hon. Friend and my other hon. Friends—

Hon. Members: indicated assent.

Mr. Freeman: I am grateful for hon. Members' assent. My understanding is that because amendments Nos. 239 and 242 provide a wide power, amendments Nos. 240, 241, 243 and 244 are not so necessary.

Sir John Stanley: indicated assent.

Mr. Freeman: I am grateful to my right hon. Friend for indicating that he will not seek to press those amendments to a Division.
I hope that, with those assurances, the House will be content. We welcome the role of the consultative committees. This is the first occasion on which I have had a chance to debate with the hon. Member for Newbury (Mr. Rendel). The hon. Member for Cunninghame, North (Mr. Wilson) will assure the House that in Committee we repeatedly gave assurances about the role of the consultative committees. Indeed, we reached agreement with the chairman of the Central Rail Users Consultative Committee about its appropriate powers. I am sure that the chairman and the members will welcome this further


extension. We satisfied them on all other counts that they would have a vital role to play under the general aegis of the regulator. They have a role to play in the closure procedure, and they will now have an important role to play in fares. That is to be welcomed.
I hope that, with those comments, the House will accept Government amendment No. 109 and that in due course, when we come to consider the other amendments to which my right hon. Friend the Member for Tonbridge and Mailing spoke, my assurances will be accepted. I hope that the House will accept Government amendment No. 109.

Sir John Stanley: With the leave of the House, Mr. Deputy Speaker. I am most grateful to my hon. Friend the Minister for accepting the important amendments Nos. 239 and 242, which substantially enhance the consumer protection afforded by the Bill. I also accept that I failed to spot the fact that buried away in schedule 11 were the special arrangements for London. To that extent, the amendments were defective and we need to add equivalent amendments for London. I know that my hon. Friend will put that right in another place. I speak for all my hon. Friends in expressing our appreciation to him for wisely accepting the amendments. I am grateful.

Mr. Wilson: By leave of the House, Mr. Deputy Speaker. I welcome what the Minister has said on the issue. It is perfectly true that considerable progress was made in Committee on the consultative committees. it is logical that, among the other matters that the consultative committees consider, they should also be able to speak on fares. The matter goes further than that. The job now is to encourage them to speak on fares and to take a lively interest in them, especially in the light of what has been said about the role of the franchising director, arid about his ability to control fares and to ensure that the market does not operate.
It is strange that, now that the hubbub has died down and less attention is being paid to what is going on here than was the case earlier, what the Minister has told us tonight about the controls on fares and about the role of the franchising director is probably the most important announcement made today.

Amendment agreed to.

Clause 4

GENERAL DUTIES OF THE SECRETARY OF STATE AND THE REGULATOR

Mr. Cynog Dafis: I beg to move amendment No. 227, in page 4, line 19, at end insert—
(h) to protect the interests of rail users living in rural areas or on the route of predominantly rural railway lines.'.
The fact that the Bill is driven at least partly by the need to modify the United Kingdom's current economic difficulties by raising ready cash for current spending emphasises the need for a commitment to protect predominantly rural lines to be included on the face of the Bill. Hon. Members will be aware of the findings of the Transport 2000 report, which concludes that any savings resulting from privatisation will be heavily outweighed by extra costs of various kinds, leading among other things to
the closure of most rural train services.
Any proposal to close any line in Wales will be met by public fury. Such a response would be wholly justified.
Let me give an example. The Cambrian main line from Shrewsbury to Aberystwyth is classed as a rural line. In the Transport 2000 scenario, it would be a candidate for closure. The effect of such a closure would be disastrous. At Aberystwyth we have a centre of higher education and research of international significance. The education and research activity is not only important in itself; it is fundamental to the economy of the western seaboard of Wales.
The institutions that constitute the core of the economy of Aberystwyth and its hinterland—the University of Wales in the town, the Welsh agricultural college, the national library of Wales, the Institute of Grassland and Environmental Research and others—deservedly attract substantial public and private funding. For example, the University of Wales in Aberystwyth will receive £13,600,000 this year from the Welsh Higher Education Funding Council. The railway line linking all those institutions to the rest of Britain, including London and the south-east—which is the immediate source of a considerable amount of their funding—is literally vital. It is essential for journeys to conferences, seminars and committee meetings, to attend and deliver lectures and so on. It is essential for the rapidly expanding student body which patronises it extensively and economic development of other sorts through the Development Board for Rural Wales. Public funding is made available to provide factory space and so on and funding is provided through the Wales tourist board to enhance the area's attractiveness for tourism.
The money that is made available to the Aberystwyth-Shrewsbury line from the public service obligation grant —it is about £2·5 million per annum—and bodies such as the DBRW and local authorities is well spent. It needs to be seen not as a subsidy to prop up an unprofitable line but as essential investment. Without that funding, other public and private sector money would be money down the drain.
Not all rural lines are able to make such ambitious claims as the Aberystwyth to Shrewsbury line, but they have a highly significant role in their various ways. The closure of the Cambrian coast line from Meirionnydd to Pwllheli would be a bitter blow to the economy and communities of Meirionnydd, Dvyfor and Arfon.

Mr. Dafydd Wigley: Does my hon. Friend accept that the line to Pwllheli is absolutely vital not only for the local community but for the tourist industry, which is one of the main industries in the area? The area has high unemployment and is threatened with losing intermediate development status.

Mr. Dafis: My hon. Friend's point underlines the theme that I am pursuing—that is, that grants of this sort must be seen as part of public investment and part of the economic prosperity of the areas in which they operate. At the same time, the loss of the glorious heart of Wales line would be a serious deprivation to extensive rural communities and would eliminate the link between the Cambrian and Great Western lines. Those lines are important. But if they are important today, they will be more important in the future.
Tomorrow, European Standing Committee B will consider, among other things, a draft directive from the European Community introducing a tax on carbon dioxide emissions and energy. That is a straw in the wind indicating the way in which that wind is blowing. We are


witnessing no less than the hesitant setting out on the difficult journey towards environmental sustainability. As to where that journey will take us, one can only theorise at this stage. But no one should underestimate the enormous implications of the need to achieve environmental sustainability. What is certain is that it must involve a massive shift in emphasis from private to public transport and from road to rail. In turn, that means that any area that lacks a railway in the future will be more severely disadvantaged than it is at present. We must not allow the difficulties and inefficiencies created by privatisation to undermine the key component in the economy of the future. That is why we need this amendment on the face of the Bill.
Finally, and perhaps most importantly, the Government's proposals for franchising announced yesterday—they were praised in some areas—are totally unacceptable to the people of Wales. What logic on earth can justify a structure that puts Fishguard with Penzance, Pwllhelli with Lowestoft, Barmouth with Yarmouth and Blaenau Ffestiniog and Holyhead with Carlisle? The proposals will fragment the Welsh railway service, leaving most Welsh routes peripheralised. It is no less than an attack on the national integrity of Wales.
Even at this late stage we demand that the Government adopt the imaginative and practical proposal of the Select Committee on Welsh Affairs that a Wales and the Marches railway be established and franchising—if, alas, it must come—be based on that structure. It is a well researched and firm proposal. It was studied and is supported by the Select Committee. That is the only way in which we can hope for an expanding rail service that is relevant to Welsh needs and—this is equally important and perfectly possible—an integrated transport policy for Wales. The Welsh Office is responsible for Welsh highways. It should also be made responsible for funding the rural railways of Wales. If we do not receive an undertaking from the Government to provide such a structure, we shall force a Division on the amendment.

Mr. Malcolm Bruce: I am grateful to the hon. Gentleman for tabling the amendment because the issue is extremely important. The amendment draws attention to the importance of the rural rail network and the need to secure it. The hon. Gentleman understandably—because he comes from a Welsh constituency—talked especially about Wales. I apologise for not being here at the beginning of his speech.
I am sure that the Minister is well aware that there is considerable concern in the rural areas of Scotland about the future of the network. At the beginning of May, there was an event in Inverness that involved Liberal Democrat Members and people from all over the north of Scotland. More than 200 people were in the town house in Inverness demonstrating their support for the railway network in the north of Scotland and their concern for its future.
One of the people who spoke in support of the campaign that we were launching at that juncture was a member of the Conservative party and a councillor for Caithness and Sutherland. He expressed his extreme disquiet as to how on earth the fragile rail network in the north of Scotland could survive franchising, let alone full

privatisation. There were representatives from the Scottish National party, the Green party and the railway development society at the event, as well as many representatives from the Liberal Democrat party.
All the lines that serve the north of Scotland lose money. It is difficult to see how on earth they can make money in a straightforward business sense for the simple reason that they cover long distances over sparsely populated areas where, although tourism is a major attraction and source of revenue, they are a permanent year-round link for people who live in the area. That is the real concern of the local community.
If one goes to the west highlands, there is no doubt whatever that the number of people travelling on the Kyle line—it is one of the most attractive and scenic routes in Britain and perhaps in Europe—bring an enormous amount of business to the communities of Kyle of Lochalsh and Skye which would not otherwise arrive if there were no railway. Many people simply would not go if they had to go by road. It is the attraction of the rail service that takes them there.
Obviously, the same argument applies to the West Highland line that goes from Fort William to Mallaig and across to Skye. Such services are absolutely vital. ScotRail recently announced that it will no longer take tanker freight on the west coast line and freight will now have to travel on a wholly inadequate road. A decision was made last year to change the basis on which freight would be accepted on the railway line that most directly affects my constituency—the one running between Aberdeen and Inverness. At one point, we were faced with the possibility of a substantial amount of timber traffic, whisky industry traffic and paper industry traffic being diverted from the railway line on to the A96. Ministers have acknowledged that the A96 is one of the busiest and most dangerous roads in the north of Scotland. A £100 million upgrade programme has been launched for it.
Yet the road is wholly inadequate for the extra traffic that would have to travel on it if the railway line was even run down—never mind closed—and freight could not be handled on it. The amendment is important. I shall be interested to hear from the Minister how a ScotRail franchise will fundamentally change the nature of the service in ways that will reassure the community in the north of Scotland. I can tell him that the community is not assured by the present state of the service or its future development.
The Minister will be well aware of the changes in the fare structure that were introduced last week. As a consequence, some regular travellers on the line between Inverness and Aberdeen in the constituency of the hon. Member for Moray (Mrs. Ewing) and in my constituency face fare increases of up to 60 per cent. If people cannot absorb such an increase, they will travel by car on a road which is already congested and, of course, deprive the railways of the revenue. One is left with the suspicion—I put it no higher than that—that ScotRail is about discouraging people from using the railways to the point at which it can justify cutting the service and perhaps ultimately phase out the lines which lose the most money.
The House will be interested to hear how the Minister believes that his proposals will not merely protect the lines but ensure that the service is developed and used in the way that local communities want. That requires several things. It requires a competitive fare structure that will attract people on to the network, services that connect with the


main line inter-city services to the south, rolling stock that meets the needs of passengers, and reliability of service. None of those things is available now.
If the Minister's argument is that, by definition, franchising or privatisation must be an improvement, he must tell the House how and why. As far as I understand it, the main applicants for the franchises are likely to be the existing management of ScotRail. If the managers are not managing now, it is difficult to see how they will do so in the same basic scenario. They need investment, a proper transport policy and a commitment to a future for rural lines. Rural lines must be not only protected but developed and invested in. We must have a proper transport policy to secure their future and use them in the interests of the whole community.
I welcome the amendment tabled by the hon. Member for Ceredigion and Pembroke, North (Mr. Dafis). If I do not receive assurances, I shall certainly join him in the Lobby.

Dr. Marek: The hon. Member for Ceredigion and Pembroke, North (Mr. Dafis) has tabled a useful amendment. In Committee many amendments were tabled to clause 4, which deals with the duties of the regulator. Although amendments were tabled which encompassed amendment No. 227, a specific amendment to that effect was not tabled. As the topic is new, it has been chosen for debate. I welcome that. The hon. Gentleman has my support principally because the subsections of clause 4 will be many and varied.
Clause 4 will create a conflict of duty for the regulator. He will have to decide whether he should place more weight on one duty under clause 4 or on another. If amendment No. 227 is accepted, the Bill will say explicitly that an important part of the railway network must be considered by the regulator. It is even more important that the clause should include such a requirement in view of the map which the Government have produced for the franchise networks.
I shall not deal with all the networks. Let us examine one franchise network. The one called Central is a huge amorphous mass which stretched from East Anglia to the west coast of Wales. It is clear from the map that the lines in Wales will be peripheral to the organisation that will run the Central franchise. Such lines will not make a profit because the lines are a service to the people. They are part of the social railway, so they will depend for their existence on grant or subsidy from the Government. Subsidy is not a dirty word; it is there for good social reasons.
The lines in Wales will demand more subsidy than the lines in the west midlands or east midlands. As he will have to satisfy the shareholders, the franchisee will look for where he can make savings to increase profits. That will always be at the expense of the lines in Wales.

Mr. Elfyn Liwyd: Does the hon. Gentleman accept that a subsidy for socially necessary lines will be guaranteed for only three years under current Treasury rules? Does he share my anxiety about the future after that initial honeymoon period?

Dr. Marek: The hon. Gentleman makes a good point. It was put well by the late Lord Ridley—perhaps it was a deathbed repentance. What he said was right. Once the franchise has been granted, after three, four or five years the franchisee will say that the subsidy is not high enough. He may say that a recession or something else has occurred

and that he needs more subsidy. But the Treasury will say —certainly with the Government's handling of the economy, bringing it to the brink of ruin—that there is a £50 billion public sector borrowing requirement and that it must cut the subsidy. What will happen after that?
Rural lines in Wales will be threatened with closure as a result of the Government's proposals. I have no doubt about that. It will happen because the lines in Wales will be peripheral to the franchise.
It will be worse than that. The inter-city lines will probably be truncated. I doubt whether we shall have any inter-city lines to Holyhead after the three-year period comes to an end or after four or five years. It is far more likely that the west coast main line inter-city service will operate along the main line proper, going to Liverpool, Manchester and perhaps Preston, but that feeder services will be run from Crewe to Holyhead. The same thing will happen on the Great Western main line from London to Cardiff. Perhaps services in Swansea will not be up to the present frequency. There will certainly be no inter-city services to Carmarthen or Fishguard.
I am depressed by what is happening and by the large franchises that the Government propose. They will not do Wales any good whatever. The centre of operations will be Birmingham. Wales will be an encumbrance to the franchisee. It will be something that the shareholders can do without. It will lose money. Evening services will be cut.
The Railtrack authority will not have so much incentive to keep the track bed in good condition, so the services will be slower. There is one thing that we can do. Opposition Members do not have the powers that Conservative Members such as the right hon. Member for Tonbridge and Mailing (Sir J. Stanley) and the hon. Member for Ashford (Sir K. Speed) have; those powers are welcome and they use them well. They have achieved a few concessions. It is all very well the Minister saying that the Central Rail Users Consultative Committee should be able to consider fares. He did not say that to me in Committee two months ago.

Mr. Alan Williams: Does my hon. Friend recognise that the concessions may have been won at our expense? In the past 48 hours we have had talk of capping to assuage the fears of some Conservative Members. The concept of socially necessary railways may be replaced by politically necessary railways.

Dr. Marek: That is very likely, but I do not want to be rude to the Minister at this stage because there is a possibility that he will accept this amendment. He has been very good off and on this afternoon. I shall try to catch your eye later on, Mr. Deputy Speaker, if he proves not be as helpful as he has been.
Wales suffers from this peripherality problem in the north, the centre and the south. He should do something about it, and one of the things he could do is to accept the amendment of the hon. Member for Ceredigion and Pembroke, North.

Mrs. Margaret Ewing: I am a co-signatory of this amendment and I believe that many hon. Members are grateful that it has been called so that we can discuss the issue of rural railways.
I wish first, on behalf of all my colleagues on the nationalist Bench, to place on record our great respect for


Robert Adley, who was the Chairman of the Transport Select Committee. Those of us who were here in the 1970s remember him well. We will very much miss his independent spirit, his approach and his kindness to all hon. Members, as well as the respect in which he held every point of view. I speak very personally, since Bob was a neighbour of mine in London, living directly opposite me in Pimlico. I shall miss him as a very kind personal friend.
Turning now to amendment No. 227, as I have said, many of us welcome the fact that there is an opportunity to discuss at Report stage our great concerns about the future of railways in rural areas. Many of us can speak about aspects in our own constituencies and I, of course, will do that. But I hope that the Minister will bear in mind that those of us who speak on behalf of our rural areas are also taking on board the importance and significance for all other rural areas of the United Kingdom.
I wish to refer in particular to the Inverness to Aberdeen railway, which has already been mentioned by the hon. Member for Gordon (Mr. Bruce). Inverness is, of course, the capital of the highlands of Scotland and Aberdeen is the oil capital of Europe. There are 109 track miles between those two centres and they are a very vital 109 miles. The stations along that line—not only in my constituency, but in the constituencies of the hon. Members for Inverness, Nairn and Lochaber (Sir R. Johnston) and for Gordon—Nairn, Forres, Elgin, Keith, Huntly, Insch and Dyce, are all extremely significant to the economy of our communities.
Two of the stations within my constituency, Forres and Elgin, may have particular memories for the Minister in his previous capacity in the Ministry of Defence, because they are vital to the two RAF bases of Kinloss and Lossiemouth, serving not only the personnel on those bases, but their families and friends. They are vital to the whole life of our communities. There are the commuters who travel daily, perhaps westward to Inverness or eastward to Aberdeen, for their jobs. Many people are attracted to our area because of its beautiful environment, the hospitality of our people and the fact that it is a very pleasant area to visit. It is vital that our tourist industry is sustained if we are to compete with other areas.
This is also an extremely important line for students in my constituency who travel to Inverness college or to Aberdeen, to one of the two universities there, or to some of the other colleges.
I refer particularly to something that has happened recently. From Keith, in my constituency, a student who formerly paid a fare of £7·25 daily is now expected to pay £11·50 daily—an increase of 60 per cent. Many of these people are mature students and perhaps single parents, who may be turned away from training and education opportunities.
I therefore argue strongly that we should think carefully about those who use the line and ensure that they are asked to pay only economic fares, making it possible for them to promote their careers and their future.
The same applies to our pensioners, who are now expected to pay an increase of 50 per cent. Yet, for pensioners, the opportunity to visit Inverness or Aberdeen is vital to their social lives.

Mr. Alex Salmond: It is worth emphasising to the Minister, in case he is not aware of it,

that, because of the accommodation crisis for the two universities in Aberdeen, students live in a very large area served by the railway line in my hon. Friend's constituency, and also live in my constituency, where there is no railway at all. They are forced to travel each day as they cannot be offered accommodation by the unversities because of the exceptional pressure on rents and properties in Aberdeen.

Mrs. Ewing: I certainly agree with my hon. Friend. That is a point that should be emphasised, because all the stations along this line serve a very substantial rural hinterland. They do not serve the town or village alone; they serve a large number of people who travel by bus or car to the stations to travel on to Aberdeen or Inverness.
We should not forget the businesses in our community. I never cease to remind the House that my constituency contains 43 whisky distilleries—some of the biggest money-spinners that the Exchequer has in the United Kingdom. It is very important to that business that we have good communications, not least because the whisky industry attracts many tourists who want to follow the whisky trail and spend money in our communities.
We have agriculture, fishing and timber and their associated processing industries. They need to be able to compete on a level playing field with the rest of the European Community. If there is any threat to the Inverness-Aberdeen line, a substantial part of the economy, not only of the north-east and the highlands of Scotland, but of the United Kingdom, will be threatened.
At the moment ScotRail appears to have decided to de-man our stations in the rural communities. It seems that in Forres and Keith there will be no cover in the evenings for people either boarding or alighting from the trains. This is particularly important for women and students, young people who are perhaps afraid to get off the train because of the surrounding conditions.
I ask the Minister seriously to look carefully at assuring the future of this line, the safety, and the level of fares that will make it an economic line, and at guaranteeing that there will be no rundown of the service.
The current fears in my constituency are perhaps epitomised by an article in the Banffshire Herald, under the headline:
ScotRail fares shock for Keith young people",
in which ScotRail says that, having always thought that it was an independent organisation, it now has to folllow national rulings on fares and manning levels.
These fears are now being exacerbated by the prospect of a franchising system which would make this line one of those threatened, and I make a strong plea that it be given special consideration.

Mr. Wilson: This is an important debate and it is noticeable that rural Wales and rural Scotland are well represented here, while the voice of rural England is largely notable by its absence. I would think that there are large parts of England where rural services are threatened and it might have been prudent, from a sense of self-preservation, at least to listen to what is being said, even if not supporting the amendment in the Division.
There is no doubt that, if the Bill goes ahead in its present form, a substantial number of rural services will disappear within a relatively short time. That is because there will not be the money in the system to sustain them. It will not be in the system that is at present run by Regional Railways and, as my hon. Friend the Member


for Wrexham (Dr. Marek) said, there will be particuarly serious implications for InterCity services to the peripheries, for reasons which we discussed last night.
I was interested in the point made by the hon. Member for Ceredigion and Pembroke, North (Mr. Dafis) about the Welsh franchises. He is absolutely right; it is an extraordinary dog's breakfast and the Welsh are right to take such an attitude towards it. I was also interested in his point that the Welsh Select Committee had made a powerful and well-considered argument in favour of a Welsh railway entity similar to that which exists in Scotland. Scottish regional services have been categorised as a franchise.
It is worth drawing attention to the contrast between what happened in Scotland and what happened in. Wales. In Scotland there was no argument from the Select Committee or anyone else in favour of franchising the entire Scottish service. That is confirmed by the fact that, whereas the ludicrous approach which characterises the Bill has been applied in Wales, in Scotland the rationale for turning ScotRail into a private railway is not because there is any intrinsic merit in it but because that approach has been built round an expression of interest. The Government are so desperate to get interest in management buy-outs that when one emerged in Scotland it was seized on and used as a justification for their approach.
I have no doubt that if the legislation takes its logical course, there will be rural closures. Some of the reasons have been mentioned already and I shall not repeat them. It is clear that there will not be enough money in the system. I shall briefly dwell on two additional reasons that have not been mentioned in the debate.
One of the buzz words of the legislation has been transparency. I would not wish to misquote the Minister, but I think that he said in Committee in a very grand manner that transparency was an important principle of Conservatism. I remarked that transparency is something that one can see through. When applied to the legislation, transparency is an immensely dangerous concept for rural rail services.
The opposite of transparency is cross-subsidy. At present, we have a sensible arrangement whereby we have loss-making lines and profit-making lines and a balance between them because we are operating a social railway and the social ethos and commitment is accepted. However, in the brave new world that the Minister is trying to create there will be transparency. There, for all to see, will be the costs and the revenue attached to each line. As soon as the figures emerge, the threat to the existence of the heavily loss-making lines will be multiplied overnight by many factors.
The Government will be able to say from day one, "Is not it absurd that we are paying this level of subsidy per passenger when there is a bus service? Why not substitute the bus service for the railway?" That argument will be advanced from an early stage. Because the operators will have a vested interest in getting rid of the services, every trick in the book will be deployed to create a level of usage and therefore a ratio between a usage and a subsidy that will appear so absurd that they will be able to withdraw the service. Transparency is an important factor and a serious threat, particularly to rural services.
Another reason of which I have become aware when travelling around Scotland, England and Wales is the fact that in rural areas and remoter parts of the country

geographical conditions often produce particularly difficult and expensive problems in maintaining the railway. That is quite logical when one thinks about it. I pay tribute to the engineers and the genuine entrepreneurs —as opposed to the chancers who rip off public assets today—who built the railways, the viaducts and the infrastructure in rural areas. However, that infrastructure is difficult to maintain.
When the Bill becomes law, the costs that attach to each line will be set against that line and not against the system. I have discussed the effect of that in a local context in the south-west of England, the north of Wales, the Lake District and, of course, Scotland.
The classic example was the floods in Scotland in January when two bridges were washed away. From the day after the incident happened, ScotRail and British Rail were on the scene. There were no questions asked about whether the work should go ahead on the two bridges in Perthshire and the line brought back into operation as quickly as possible. British Rail was bringing back into operation lines which had and always would be loss making but on which rural services were dependent. To do that, without any doubt or delay, it spent £1 million.
8.45 pm
What would happen in future is very much open to question. It will not be British Rail that will be charged with the responsibility or the decision about what to do with the loss-making routes and the reopening of the bridges; it will be Railtrack, which will be under commercial instruction to get an 8 per cent. return on profits. Where that £1 million would come from to restore the bridges is in itself questionable. If it were found, it would be set against the costs of that particular line and no other. However, Railtrack could decide not to spend £1 million and to close the line.
I am sure that hon. Members representing all rural parts of Britain can identify similar problems in their own areas where viaducts, embankments and bridges are extremely expensive to maintain and where, without exceptional expenditure, the lines will close.
There are two additional reasons why rural railways will be very much under threat. No assurance that the Minister can offer tonight will change the picture as they are intrinsic factors which will create grave doubts for many of the lines. The Minister cannot tell me tonight that in the same circumstances Railtrack would have spent £1 million to bring a loss-making railway back into use as Railtrack will have a commercial imperative laid upon it by the Government.
It is an important issue. Everything running through the Bill concerns rural areas, but I am happy to discuss them in a specific context, as we did in Committee, and to emphasise what is obviously a concern to me in Scotland, but also applies throughout Britain—that rural rail services are endangered and the Bill presents the gravest threat to them since the existing network was established and settled more than 20 years ago.

Mr. Freeman: The hon. Member for Cunninghame, North (Mr. Wilson) says that he is at least one of the voices that speaks for rural Scotland. I speak for rural England and, frankly, many of my right hon. and hon. Friends have been infuriated by the fact that the hon. Gentleman believes that if he repeats often enough the false assertion that rural railway lines will close, it will happen. It will not


happen and I want to explain concisely but clearly to the hon. Member for Ceredigion and Pembroke, North (Mr. Dafis) why his rural railway services are not under threat.
First, we have given a commitment that subsidies for our socially necessary services will continue. The level of support from central Government and from local authorities will vary depending upon the profitability of the railway services. That subsidy is now running at the rate of about £1,000 million per annum. It fell in the middle of the 1980s when fare revenues were rising. Broadly speaking, at the beginning of the 1980s, they were at the same level as they are today. We have given a clear commitment that central Government—the taxpayer—will support socially necessary services.
I have been debating that point with the hon. Member for Cunninghame, North for four months, week in, week out, and he is still not convinced that the change in the public service obligation grant this year compared with last year does not represent a threat to rural railway services or to Network SouthEast services.
The railways must adjust the frequency of their services in response to demand. The change in the public service obligation provision for this year compared with last year—it is the only year for which we have made a proper forecast; there are indications of how the external financing limit for British Rail might be split in future years, but we will not fix the PSO grant until just before the beginning of the financial year—has occurred for the good reasons of an increase in fare revenue, a diminution in costs and a change in the level of investment in rolling stock.

Mr. Salmond: The Minister is making the obvious point that railway revenue is cyclical—that in time of recession the revenue goes down and that during better economic circumstances it goes up. That is one of our fears. The Minister is saying that, in time of recession, the railways need more support than they require in different economic circumstances. Yet the Government are not engaged in a process of making radical cuts and reassessments of whole areas of public spending. Is he now saying that the railways will be immune from the assessment that is currently being made?

Mr. Freeman: The hon. Gentleman is misinformed because if he casts his mind back a couple of years he will see, if he studies the figures fairly, that the PSO grant was increased in mid-year for two years running as a result of the recession—[interruption.] Yes, it was increased by upwards of £500 million.

Mr. Alan Williams: How can the Minister give such assurances when the axe-wielding Chief Secretary is wandering around saying that absolutely nothing is sacred?

Mr. Freeman: If the economy is running at such a level that fare revenues are up—and obviously every extra pound that BR can attract from fare revenues largely goes straight down to the bottom line, because once one runs a train, most of one's costs are already sunk—less public support is needed to run an existing level of service. We have given a commitment to support socially necessary

services. Next, we have said that we intend to franchise all railway services in Great Britain, including all the rural railway lines to which reference was made.
The hon. Member for Ceredigion and Pembroke, North referred to the franchise map. That map is based on the existing route structures of British Rail. Ministers did not decide how to arrange the provision of railway services in Great Britain. BR did that. We have simply said that we think it is sensible to build on the existing management structure of BR to franchise the services. So the hon. Gentleman should be directing his concerns to BR, not to Ministers, because we have said that we believe it to be sensible to proceed with the minimum reorganisation of BR's management structures.
Under the closure procedure, in the circumstance of a franchisee—or, indeed, BR—finding that there is not sufficient patronage, even with subsidy and the franchisee running services that were in the timetable immediately before the franchise, and there is need to close a station or a particular railway service, we have the toughest closure provisions in western Europe in terms of the procedures that must be followed, involving the rail users consultative committees and ultimately an appeal to the Secretary of State.

Mr. Ieuan Wyn Jones (Ynys Môn): The possible closure issue is of particular concern. Does the Minister appreciate the valid point made by the hon. Member for Wrexham (Dr. Marek) about instances of a reduction in service, for example, a change from InterCity to regional use? That danger exists in north Wales. We fear that in three or four years from now, the InterCity service might be reduced or removed along the north Wales coastline and we shall be left with Regional Railways. What assurances can the Minister give that that will not happen?

Mr. Freeman: There are many complaints about the prospect of reductions in service. The InterCity service to Holyhead is part of the InterCity network and is part of the west coast main line railway services. When we come to franchise the west coast main line, it will be done on the basis of the services that then prevail. I am certain that that will include Holyhead, so the Holyhead services will be included in that franchise.
I accept the point made by several hon. Members about the potential for the development of lines, particularly for tourism, not only in rural Wales but in Scotland. We expect franchisees to take risks and decisions to expand railway services, particularly in the summer, because BR as a state monopolist is not a risk-taker. It has a precise overdraft and is therefore somewhat constrained. I am not criticising BR because that is the nature of a public sector body. But the private sector franchisee will take risks and will exploit the market where additional services can be provided. On the basis of discussions with potential franchisees operating in Wales and Scotland, I am certain that that will happen.

Mr. William Cash: Can I take it from what my hon. Friend said that the west coast rail link will go through? He suggested in a recent letter to me that the matter was open to certain tenders, options and the rest. I am delighted to hear that the west coast rail link will go through. Does he agree that many people who are now coming from Shrewsbury and other rural areas will make great use of that west coast link? It will be a highly


cost-effective arrangement which will ensure that people get the kind of treatment that the Bill is designed to provide.

Mr. Freeman: I am grateful for my hon. Friend's support. I confirm that the west coast main line service will be franchised.
The argument of the hon. Member for Wrexham that he needs the amendment does not stand up. He will see that clause 4(1) says that both
the Secretary of State and the Regulator shall each have a duty … to protect the interests of users of railway services".
That applies to all railway services—rural, suburban and InterCity. Why should one write into the Bill a provision just for rural railway services?

Mrs. Ewing: Why not?

Mr. Freeman: Because once we started doing that, we should have to add every category of railway service that is comprised of BR's services. I hope that, on that logical basis alone, the amendment will not be pressed to a Division, and I suspect that it will not be.

Mr. Salmond: I had a feeling of déjà vu as the Minister was speaking. My mind went back to the debates of about five years ago when we were discussing the privatisation of the steel industry. Ministers were then assuring us that privatisation would make no difference to the future of the Ravenscraig steel plant. We were accused of scaremongering. Indeed, Ministers adduced a host of reasons to suggest that privatisation would assist the future of Ravenscraig.
We found what we suspected: that privatisation was used as an excuse for the Government to wash their hands of responsibility for the future of the steel industry. The privatisation process was used—[Interruption.] Perhaps the voices of rural England behind the Minister are finally entering the debate. Conservative Members may like to enter the debate rather than mutter from a sedentary position. That particularly applies to the hon. Member for Harlow (Mr. Hayes).

Mr. Jerry Hayes: What on earth has that got to do with the amendment?

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): Order. Mr. Salmond.

Mr. Salmond: I know that the hon. Gentleman gets a little sleepy because of his commitments to late night television, but even he should be able to grasp the significance of a comparison between the two privatisations.
My point was that Ministers subsequently used the steel privatisation as an excuse or pretext for washing their hands of the future of the industry. I suspect that the same will apply in the case of the railways. The Minister tells the House that there is no need to write protection for rural railways into the Bill, but that argument carries little credibility. He argues, weakly, that we should respect his assurance that the Government will subsidise the railways by way of a counter-cyclical effect on the privatised railways lines. These are times of economic stringency when everything else is up for grabs. The Treasury is threatening to introduce highly unpopular charges in the NHS and even mortgage tax relief has been targeted—

Mr. Deputy Speaker: Order. The Chair has now decided that the hon. Gentleman is straying too far from the amendment.

Mr. Salmond: The Minister argued that the railways would be immune from the process of cost-cutting—a difficult argument to sustain, and it carries no conviction and swayed no sentiment. We believe that the privatisation process will be used as a pretext for the Government to wash their hands of the future of the railway system, and that system will be most at risk on the rural lines of Scotland, Wales and England.

9 pm

Mr. Dafis: The justification for the amendment is clear. It is generally recognised that rural lines are especially vulnerable because of their infrastructure costs—viaducts, and so on—and because they serve scattered populations. But they are certainly crucial to people who live in areas remote from population centres.
This vulnerability is explicity recognised in the recent report, "Transport 2000". The amendment would certainly be useful and it is necessary, we think, to mention in the Bill the responsibilities of the franchising authority for rural lines. The Minister is not prepared to accept the amendment, so I am afraid that I will have to ask the House to divide on it.

Question put, That the amendment be made:—

The House divided: Ayes 172, Noes 299.

Division No. 282]
[9.1 pm


AYES


Adams, Mrs Irene
Eastham, Ken


Ainger, Nick
Ewing, Mrs Margaret


Ainsworth, Robert (Cov'try NE)
Faulds, Andrew


Ashdown, Rt Hon Paddy
Foster, Don (Bath)


Ashton, Joe
Foulkes, George


Austin-Walker, John
Fraser, John


Banks, Tony (Newham NW)
Gapes, Mike


Barnes, Harry
George, Bruce


Barron, Kevin
Godman, Dr Norman A.


Bayley, Hugh
Godsiff, Roger


Beith, Rt Hon A. J.
Golding, Mrs Llin


Benn, Rt Hon Tony
Graham, Thomas


Bennett, Andrew F.
Griffiths, Win (Bridgend)


Benton, Joe
Grocott, Bruce


Betts, Clive
Gunnell, John


Boyce, Jimmy
Hain, Peter


Boyes, Roland
Hanson, David


Brown, Gordon (Dunfermline E)
Hardy, Peter


Brown, N. (N'c'tle upon Tyne E)
Harvey, Nick


Bruce, Malcolm (Gordon)
Heppell, John


Burden, Richard
Hinchliffe, David


Caborn, Richard
Hogg, Norman (Cumbernauld)


Callaghan, Jim
Hood, Jimmy


Campbell, Mrs Anne (C'bridge)
Hoon, Geoffrey


Campbell, Menzies (Fife NE)
Howarth, George (Knowsley N)


Campbell, Ronnie (Blyth V)
Hughes, Kevin (Doncaster N)


Campbell-Savours, D. N.
Hughes, Roy (Newport E)


Canavan, Dennis
Hughes, Simon (Southwark)


Cann, Jamie
Illsley, Eric


Chisholm, Malcolm
Ingram, Adam


Clapham, Michael
Jackson, Glenda (H'stead)


Clarke, Eric (Midlothian)
Jackson, Helen (Shef'ld, H)


Coffey, Ann
Jamieson, David


Connarty, Michael
Janner, Greville


Cook, Robin (Livingston)
Johnston, Sir Russell


Cox, Tom
Jones, Barry (Alyn and D'side)


Cryer, Bob
Jones, Jon Owen (Cardiff C)


Cunningham, Jim (Covy SE)
Jones, Lynne (B'ham S 0)


Cunningham, Rt Hon Dr John
Jones, Nigel (Cheltenham)


Dafis, Cynog
Jowell, Tessa


Dalyell, Tarn
Kaufman, Rt Hon Gerald


Darling, Alistair
Kennedy, Charles (Ross, C&S)


Dewar, Donald
Khabra, Piara S.


Dixon, Don
Kirkwood, Archy


Dunnachie, Jimmy
Leighton, Ron


Dunwoody, Mrs Gwyneth
Litherland, Robert






Livingstone, Ken
Purchase, Ken


Lloyd, Tony (Stretford)
Redmond, Martin


Llwyd, Elfyn
Reid, Dr John


Loyden, Eddie
Rendel, David


Lynne, Ms Liz
Robinson, Geoffrey (Co'try NW)


McAllion, John
Robinson, Peter (Belfast E)


Macdonald, Calum
Rogers, Allan


McLeish, Henry
Rooney, Terry


McMaster, Gordon
Ross, Ernie (Dundee W)


Madden, Max
Ross, William (E Londonderry)


Maginnis, Ken
Sedgemore, Brian


Mahon, Alice
Sheldon, Rt Hon Robert


Mandelson, Peter
Shore, Rt Hon Peter


Marek, Dr John
Simpson, Alan


Marshall, David (Shettleston)
Skinner, Dennis


Marshall, Jim (Leicester, S)
Smith, Andrew (Oxford E)


Maxton, John
Smith, C. (Isl'ton S & F'sbury)


Michael, Alun
Smyth, Rev Martin (Belfast S)


Michie, Bill (Sheffield Heeley)
Spearing, Nigel


Michie, Mrs Ray (Argyll Bute)
Spellar, John


Milburn Alan
Steel, Rt Hon Sir David


Miller, Andrew
Stevenson, George


Mitchell, Austin (Gt Grimsby)
Stott, Roger


Molyneaux, Rt Hon James
Taylor, Matthew (Truro)


Morris, Rt Hon A. (Wy'nshawe)
Thompson, Jack (Wansbeck)


Morris, Estelle (B'ham Yardley)
Trimble, David


Mudie, George
Tyler, Paul


Oakes, Rt Hon Gordon
Vaz, Keith


O'Brien, Michael (N W'kshire)
Walker, Rt Hon Sir Harold


O'Brien, William (Normanton)
Wallace, James


O'Hara, Edward
Wareing, Robert N


Olner, William
Wigley, Dafydd


Parry, Robert
Williams, Rt Hon Alan (Sw'n W)


Patchett, Terry
Wilson, Brian


Pendry, Tom
Winnick, David


Pickthall, Colin
Wise, Audrey


Pike, Peter L.
Wray, Jimmy


Powell, Ray (Ogmore)
Young, David (Bolton SE)


Prentice, Ms Bridget (Lew'm E)



Prentice, Gordon (Pendle)
Tellers for the Ayes:


Prescott, John
Mr. Alex Salmond and Mr. Ieuan Wyn Jones.


Primarolo, Dawn





NOES


Ainsworth, Peter (East Surrey)
Bright, Graham


Aitken, Jonathan
Brooke, Rt Hon Peter


Alexander, Richard
Brown, M. (Brigg & Cl'thorpes)


Alison, Rt Hon Michael (Selby)
Bruce, Ian (S Dorset)


Amess, David
Budgen, Nicholas


Ancram, Michael
Burns, Simon


Arbuthnot, James
Burt, Alistair


Arnold, Jacques (Gravesham)
Butcher, John


Arnold, Sir Thomas (Hazel Grv)
Butler, Peter


Ashby, David
Butterfill, John


Aspinwall, Jack
Carlisle, John (Luton North)


Atkins, Robert
Carlisle, Kenneth (Lincoln)


Atkinson, David (Bour'mouth E)
Carrington, Matthew


Atkinson, Peter (Hexham)
Carttiss, Michael


Baker, Rt Hon K. (Mole Valley)
Cash, William


Baker, Nicholas (Dorset North)
Chapman, Sydney


Baldry, Tony
Churchill, Mr


Banks, Matthew (Southport)
Clark, Dr Michael (Rochford)


Banks, Robert (Harrogate)
Clifton-Brown, Geoffrey


Bates, Michael
Coe, Sebastian


Batiste, Spencer
Congdon, David


Bellingham, Henry
Conway, Derek


Bendall, Vivian
Coombs, Anthony (Wyre For'st)


Beresford, Sir Paul
Coombs, Simon (Swindon)


Biffen, Rt Hon John
Cope, Rt Hon Sir John


Blackburn, Dr John G.
Cormack, Patrick


Body, Sir Richard
Couchman, James


Booth, Hartley
Cran, James


Boswell, Tim
Currie, Mrs Edwina (S D'by'ire)


Bottomley, Peter (Eltham)
Curry, David (Skipton & Ripon)


Bottomley, Rt Hon Virginia
Davies, Quentin (Stamford)


Bowden, Andrew
Davis, David (Boothferry)


Bowis, John
Day, Stephen


Boyson, Rt Hon Sir Rhodes
Deva, Nirj Joseph


Brandreth, Gyles
Devlin, Tim


Brazier, Julian
Dickens, Geoffrey





Dicks, Terry
Kellett-Bowman, Dame Elaine


Dorrell, Stephen
Key, Robert


Douglas-Hamilton, Lord James
Kilfedder, Sir James


Dover, Den
King, Rt Hon Tom


Duncan, Alan
Knapman, Roger


Duncan-Smith, Iain
Knight, Mrs Angela (Erewash)


Dunn, Bob
Knight, Greg (Derby N)


Durant, Sir Anthony
Knight, Dame Jill (Bir'm E'st'n)


Dykes, Hugh
Knox, David


Eggar, Tim
Kynoch, George (Kincardine)


Elletson, Harold
Lait, Mrs Jacqui


Emery, Rt Hon Sir Peter
Lang, Rt Hon Ian


Evans, David (Welwyn Hatfield)
Lawrence, Sir Ivan


Evans, Jonathan (Brecon)
Legg, Barry


Evans, Roger (Monmouth)
Leigh, Edward


Evennett, David
Lennox-Boyd, Mark


Faber, David
Lester, Jim (Broxtowe)


Fabricant, Michael
Lidington, David


Fenner, Dame Peggy
Lightbown, David


Field, Barry (Isle of Wight)
Lloyd, Peter (Fareham)


Forman, Nigel
Lord, Michael


Forsyth, Michael (Stirling)
Luff, Peter


Forth, Eric
Lyell, Rt Hon Sir Nicholas


Fox, Dr Liam (Woodspring)
MacGregor, Rt Hon John


Fox, Sir Marcus (Shipley)
MacKay, Andrew


Freeman, Roger
Maclean, David


French, Douglas
McLoughlin, Patrick


Fry, Peter
Madel, David


Gale, Roger
Maitland, Lady Olga


Gallie Phil
Major, Rt Hon John


Gardiner, Sir George
Malone, Gerald


Garel-Jones, Rt Hon Tristan
Mans, Keith


Garnier, Edward
Marland, Paul


Gill, Christopher
Marlow, Tony


Gillan, Cheryl
Marshall, John (Hendon S)


Goodlad, Rt Hon Alastair
Marshall, Sir Michael (Arundel)


Goodson-Wickes, Dr Charles
Martin, David (Portsmouth S)


Gorman, Mrs Teresa
Mawhinney, Dr Brian


Gorst, John
Mayhew, Rt Hon Sir Patrick


Grant, Sir Anthony (Cambs SW)
Mellor, Rt Hon David


Green way, Harry (Ealing N)
Merchant, Piers


Green way, John (Ryedale)
Milligan, Stephen


Griffiths, Peter (Portsmouth, N)
Mills, Iain


Grylls, Sir Michael
Mitchell, Andrew (Gedling)


Hague, William
Mitchell, Sir David (Hants NW)


Hamilton, Rt Hon Archie (Epsom)
Moate, Sir Roger


Hamilton, Neil (Tatton)
Monro, Sir Hector


Hampson, Dr Keith
Montgomery, Sir Fergus


Hanley, Jeremy
Moss, Malcolm


Hannam, Sir John
Needham, Richard


Hargreaves, Andrew
Nelson, Anthony


Harris, David
Neubert, Sir Michael


Haselhurst, Alan
Newton, Rt Hon Tony


Hawkins, Nick
Nicholls, Patrick


Hawksley, Warren
Nicholson, David (Taunton)


Hayes, Jerry
Nicholson, Emma (Devon West)


Heald, Oliver
Norris, Steve


Heathcoat-Amory, David
Onslow, Rt Hon Sir Cranley


Hendry, Charles
Oppenheim, Phillip


Higgins, Rt Hon Sir Terence L.
Ottaway, Richard


Hill, James (Southampton Test)
Page, Richard


Hogg, Rt Hon Douglas (G'tham)
Paice, James


Horam, John
Patnick, Irvine


Hordern, Rt Hon Sir Peter
Patten, Rt Hon John


Howard, Rt Hon Michael
Pattie, Rt Hon Sir Geoffrey


Howarth, Alan (Strat'rd-on-A)
Pawsey, James


Howell, Rt Hon David (G'dford)
Peacock, Mrs Elizabeth


Howell, Ralph (North Norfolk)
Pickles, Eric


Hunt, Rt Hon David (Wirral W)
Porter, Barry (Wirral S)


Hunt, Sir John (Ravensbourne)
Porter, David (Waveney)


Hunter, Andrew
Portillo, Rt Hon Michael


Hurd, Rt Hon Douglas
Powell, William (Corby)


Jack, Michael
Rathbone, Tim


Jackson, Robert (Wantage)
Redwood, John


Jenkin, Bernard
Richards, Rod


Jessel, Toby
Riddick, Graham


Johnson Smith, Sir Geoffrey
Rifkind, Rt Hon. Malcolm


Jones, Gwilym (Cardiff N)
Robathan, Andrew


Jones, Robert B. (W Hertfdshr)
Roberts, Rt Hon Sir Wyn


Jopling, Rt Hon Michael
Robertson, Raymond (Ab'd'n S)






Robinson, Mark (Somerton)
Temple-Morris, Peter


Roe, Mrs Marion (Broxbourne)
Thomason, Roy


Rowe, Andrew (Mid Kent)
Thompson, Sir Donald (C'er V)


Ryder, Rt Hon Richard
Thompson, Patrick (Norwich N)


Sackville, Tom
Thornton, Sir Malcolm


Sainsbury, Rt Hon Tim
Thurnham, Peter


Scott, Rt Hon Nicholas
Townend, John (Bridlington)


Shaw, David (Dover)
Townsend, Cyril D. (Bexl'yh'th)


Shaw, Sir Giles (Pudsey)
Tracey, Richard


Shephard, Rt Hon Gillian
Tredinnick, David


Shepherd, Colin (Hereford)
Trend, Michael


Shersby, Michael
Trotter, Neville


Skeet, Sir Trevor
Twinn, Dr Ian


Smith, Sir Dudley (Warwick)
Vaughan, Sir Gerard


Soames, Nicholas
Walker, Bill (N Tayside)


Speed, Sir Keith
Waller, Gary


Spencer, Sir Derek
Ward, John


Spicer, Sir James (W Dorset)
Wardle, Charles (Bexhill)


Spicer, Michael (S Worcs)
Waterson, Nigel


Spink, Dr Robert
Watts, John


Spring, Richard
Wells, Bowen


Sproat, Iain
Wheeler, Rt Hon Sir John


Squire, Robin (Hornchurch)
Whitney, Ray


Stanley, Rt Hon Sir John
Whittingdale, John


Steen, Anthony
Widdecombe, Ann


Stephen, Michael
Wilkinson, John


Stern, Michael
Willetts, David


Stewart, Allan
Wolfson, Mark


Streeter, Gary
Wood, Timothy


Sumberg, David
Yeo, Tim


Sweeney, Walter
Young, Sir George (Acton)


Sykes, John



Tapsell, Sir Peter
Tellers for the Noes:


Taylor, Ian (Esher)
Mr. Timothy Kirkhope and Mr. Robert G. Hushes


Taylor, John M. (Solihull)



Taylor, Sir Teddy (Southend, E)

Question accordingly negatived.

Mr. Gary Waller: I beg to move amendment No. 248, in page 5, line 2, after '1996', insert
', or such later date as may be appointed by order made by the Secretary of State,'.
The amendment would enable the period during which the regulator is obliged to take account of advice issued by the Secretary of State to be extended by order. It would create some additional flexibility in the process of introducing competitition. I suppose that the Secretary of State's advice cannot be predicted, but it could cover the factors that the regulator will have to take into account in determining his policy on access to the rail network. My hon. Friend the Minister for Public Transport will recall that the Bill, as originally published, did not make provision for the Secretary of State to issue any advice to the regulators.
Clause 4(4)(a), which requires the regulator to take such advice into account until 31 December 1996, was introduced by the Government in Committee. Ministers justified their amendment on the ground that the success of the first round of franchising would depend on franchisees being offered some degree of exclusivity. I presume that the Secretary of State's advice to the regulator will require him to take that objective into account when he considers access agreements between the franchising director and Railtrack. That advice will counterbalance the requirement for the regulator to promote competition, in the light of the Government's acceptance that, at least initially, competition will need to be qualified.
9.15 pm
The amendment is needed if certain eventualities are to be met. First, there is the possibility that the first round of franchises will not have been let by 31 December 1996. It appears that the Bill, as drafted, would not enable the

Secretary of State to require the regulator to accept that, beyond that date, competition must be qualified. I wonder whether the Government are confident that potential conflicts between franchising and open access services will have been overcome by that date. Secondly, there is the possibility that, in the light of developments, the Government will come to the same conclusion as the Select Committee—that open access and franchising are not compatible. The Bill does not seem to provide any mechanism to deal with that eventuality.
The amendment would not require the regulator to have regard to advice issued by the Secretary of State beyond 1996; rather, it would provide a degree of additional flexibility for safeguards to be brought into effect if the Secretary of State considered them necessary. Until the franchises are working, it will not be possible to be certain whether, and to what extent, it will be necessary to regulate competition. Clearly, my hon. Friend the Minister believes that some constraints will be needed in the first round of franchises to encourage franchisees to go into the market. That can certainly be achieved through guidance. To set, at this stage, a date governing the regulator's duty to take guidance into account offers an unnecessary hostage to fortune. That is why I move the amendment.

Mr. Freeman: I should like to respond concisely to my hon. Friend, for whose comments I am grateful. He is certainly a doughty supporter of rail interests, not only as a constituency representative but as someone speaking on behalf of the Association of Metropolitan Authorities.
My hon. Friend was quite right in saying that the purpose of the amendment which was accepted in the Standing Committee was to empower the Secretary of State to give guidance t6 the regulator for a limited period—up to the end of December 1996. The aim was to make sure that the first franchises were let satisfactorily. That will probably mean what we call moderation of competition, which is the denial of certain open access rights.
I cannot recommend that the amendment be accepted, as it is inevitably a compromise between fettering the independence of the regulator and ensuring that the initial franchising is a success. I think that we have got the balance right.

Mr. John Gunnell: The system will operate for only 32 months before the clause, as drafted, takes effect. Does the Minister believe that the franchising process will be completed in that time? Everything said so far suggests that the matter will be proceeded with gradually. Although the publication of the franchise maps has taken the process forward a little, it is unlikely that 32 months will be sufficient. Given the Minister's arguments in Committee, increasing flexibility would seem to be entirely sensible.

Mr. Freeman: I appreciate that two and a half years is a relatively short time, but we expect to let a significant number of franchises by then. Completing the pattern for the whole of Great Britain will clearly take considerably longer.
As to the franchises that are let subject to the views of the regulator acting on guidance from the Secretary of State, one is looking at a period of anything up to 10 years after the given date, during which time the franchisee will have some degree of exclusivity. That will almost certainly


apply in the case of Network SouthEast services, for operational reasons—because additional services cannot be run into London stations during peak hours. I suspect that it would not be possible at peak hours to thread in open access services.
I cannot commend my hon. Friend's amendment to the House because if we are to encourage the development of open access services that are not under the franchise regime, at some stage they must be given the right to compete for train paths and to challenge for the right to provide rail passenger services.
I probably have not convinced my hon. Friend, but when we drafted the amendment for the Committee stage, we faced a difficult choice as to where the cut-off point would be. If we had extended it to 10 years, that would have stifled independent railway operation. If we had limited it to six or 12 months, that would not have been effective in launching the first round of franchises in this Parliament.

Mr. Gunnell: Does not the Minister accept the Transport Select Committee's view that open access will mean paying a higher subsidy to secure franchisees in the first place?

Mr. Freeman: It is extremely important to get the first franchises off the ground properly. We will learn from experience and, because it will be a gradual, market-led initiative, the franchising director, from his own experience, will undoubtedly modify or amend some of his policies.
We are determined that the first group of franchises will operate successfully and that the quality of services available to the travelling public will improve. The cut-off point is a matter of judgment, but I believe that the Government have got it right and I ask my hon. Friend not to press his amendment to a Division.
We will certainly take on board my hon. Friend's comments on behalf of the AMA about non-statutory guidance to the franchising director and discussions with the regulator. However, the regulator must be independent, and it is most important that after December 1996 he will be able to operate entirely unfettered. Notwithstanding that, I know that my right hon. Friend the Secretary of State will maintain close contact with the franchising director.

Mr. Waller: I find it difficult to understand why my hon. Friend feels that the regulator would be compromised by the option, in the light of possible future uncertainties, to extend the period during which he can be given advice on a statutory basis and heed that advice. Nevertheless, I listened carefully to my hon. Friend's remarks about non-statutory guidance to the regulator. Given his other assurances, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5

GENERAL DUTIES OF THE FRANCHISING DIRECTOR

Amendment made: No. 160, in page 6, line 13, leave out 'and'and insert—
'(aa) any payments which the Franchising Director may make with a view to securing—

(i) the provision of any services, or

(ii) the operation of any network, station or light maintenance depot, or any part of a network, station or light maintenance depot,
in pursuance of any provision of sections (Failure to secure subsequent franchise agreement), 32 to 35 and (Contracts between the Franchising Director and the Board for the provision of non franchised railway passenger services) below; and'.—[Mr. Freeman.]

Mr. Freeman: I beg to move amendment No. 3, in page 6, line 16, at end insert—
'(3) Where the Secretary of State gives the Franchising Director any objectives under subsection (1)(a) above, the Secretary of State shall—
(a) lay a copy of a statement of those objectives before each House of Parliament; and
(b) arrange for copies of that statement to be published in such manner as he may consider appropriate.'.

Mr. Deputy Speaker: With this it will be convenient to discuss amendment No. 1, in clause 19, page 21, line 5, leave out
'send a copy of the approval'
and insert—
'publish the approval and shall send a copy of it'.

Mr. Freeman: Amendments Nos. 1 and 3 result from a commitment that I gave in Committee. Amendment No. 3 requires the publication of objectives given by the Secretary of State to the franchising director and a commitment to lay before each House a copy of the document. I gave the hon. Members for Kingston upon Hull, East (Mr. Prescott) and for Wrexham (Dr. Marek) that assurance in Committee.
We intend to recommend that the House accepts amendment No. 1. We shall publish a second draft of the objectives to be given to the franchising director while the Bill is still in Parliament. The first draft was tabled in Committee and we have given a commitment that the House will have an opportunity before the Bill completes all its stages to comment again.

Dr. Marek: I am pleased with the result of our debate in Committee. The Government have tabled amendment No. 3 and the Minister said that they will accept amendment No. 1. I urge my hon. Friends not to vote against amendment No. 3, although it might be their predilection to vote against anything that the Government propose in this Bill, and to support amendment No. 1.

Amendment agreed to.

Clause 7

EXEMPTIONS FROM SECTION 6

Mr. Rathbone: I beg to move amendment No. 68, in page 7, line 19, after 'granting'insert 'or refusing'.

Mr. Deputy Speaker: With this it will be convenient to discuss the following amendments: No. 69, in page 7, line 21, after 'grant', insert
'or, as the case may be, refuse'.
No. 66, in page 7, line 21, at end insert
'and, if he proposes to grant the licence exemption subject to compliance with any conditions, specifying those conditions.'.
No. 67, in page 7, line 22, after 'grant', insert
'or, as the case may be, refuse'.
No. 64, in page 7, line 23, after
'exemption', insert 'and, if he proposes to grant the licence exemption subject to compliance with any conditions, the reasons why he proposes to impose those conditions.'.


No. 65, in page 7, line 32, after 'grant', insert
'or, as the case may be, refusal'.
No. 62, in clause 8, page 8, line 41, after 'granting', insert 'or refusing'.
No. 63, in page 8, line 43, after 'grant', insert
'or, as the case may be, refuse'.
No. 60, in page 8, line 43, at end insert
'and, if he proposes to grant the licence subject to compliance with any conditions, specifying those conditions'.
No. 61, in page 8, line 44, after 'grant', insert
'or, as the case may be, refuse'.
No. 58, in page 8, line 44, after 'licence', insert
'and, if he proposes to grant the licence subject to compliance with any conditions, the reasons why he proposes to impose those conditions".
No. 59, in page 9, line 9, after 'grant', insert
'or, as the case may be, refusal'.
Government amendment No. 183.

Mr. Rathbone: Earlier we debated the fact that the regulator's role is to promote competition, to prevent abuse of market power and to protect the interests of the consumer, so there seems to be no reason why the amendments to clauses 7 and 8 should not be acceptable in the interests of transparency in the decision-making process.
It is clearly not reasonable that an operator who may have made a significant capital investment in a franchise should be denied the right to know why the regulator has granted, exempted or refused a licence-and therefore the grounds on which to challenge a decision should he wish to do so. In the interests of more open government and more openness generally, I hope that the amendments will be accepted.

Mr. Freeman: Yesterday, in a written answer and a press notice, we announced our policy on exemptions from the regime of licensing and franchising. I hope that the House will welcome the restatement of all the commitments that I gave in Committee in relation to preserved railways, light rapid transit systems and some municipal railways. I say to the hon. Member for Kingston upon Hull, East (Mr. Prescott) that nothing differs in the statement that we made available yesterday from the commitments that I gave in Committee.
I ask my hon. Friend the Member for Lewes (Mr. Rathbone) not to press the amendments, which might add a little unnecessary paperwork because only the applicant for a licence exemption or a licence application will be interested in the outcome of the regulator's deliberations. If the regulator gets it wrong, his actions will be open to judicial review.
May I give my hon. Friend one assurance, because in moving the amendments he has helped the House? Before the regulator makes a decision about an application for an exemption, or indeed in granting a licence, informal guidance will be given. We want a user-friendly system to encourage those who will be affected by a licence excemption and those applying for a licence, for example, a preserved railway that wishes to run on the railway system and take paying passengers. I hope that the words which I put on the record in response to the amendment will be helpful to those who might be affected.
9.30 pm
Moreover, where the regulator is minded to refuse a licence exemption, or to refuse a licence applicaton in the first place, I am sure that the regulator will take every

trouble to inform those most directly affected. In view of those assurances, I hope that my hon. Friend the Member for Lewes will not feel it necessary to press the amendment.

Mr. Rathbone: In view of those assurances and the Minister's previous statement, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 8

LICENCES

Amendment made: No. 183, in page 9, line 29, leave out 'the carrying on of different activities'and insert
a person to be the operator of railway assets of different classes or descriptions.".— [Mr. Freeman]

Clause 19

AMENDMENT OF ACCESS AGREEMENTS

Amendment made: No. 1, in page 21, line 5, leave out
'send a copy of the approval'
and insert
'publish the approval and shall send a copy of it'.— [Dr. Marek.]

Clause 23

INVITATIONS TO TENDER FOR FRANCHISES

Mr. Harvey: I beg to move amendment No. 185, in page 24, line 28, at end insert—
'(2A) Before preparing such invitation to tender, the Franchising Director shall obtain from the Board, or the body or person already providing services for the carriage of passengers at the time that such services are designated as eligible for provision under franchise agreements—
(i) the historic costs and revenue, the nature and frequency of the service provided, the prices charged for travel by means of those services for the carriage of passengers by railway; and such other incidental and supplementary information as is in the opinion of the Franchising Director necessary to form a true and fair view of the balance between historic costs and revenue;
(ii) the projected costs and revenue, the nature and frequency of the service to be provided, the prices to be charged for travel by means of those services, for the carriage of passengers by railway if they were to be provided, or to continue to be provided otherwise than under the proposed franchise agreement; and such other incidental and supplementary information as is in the opinion of the Franchising Director necessary to form a true and fair view of the balance between the projected costs and revenue (in this part referred to as the "projected balance")
(2B) When issuing an invitation to tender, the Franchising Director shall include in the invitation all the information referred to in paragraph (i) above, but not the information referred to in paragraph (ii) above.'.

Mr. Deputy Speaker: With this, it will be convenient to discuss also the following amendments:
No. 186, in clause 25, page 26, line 18, after '(1)', insert 'Subject to subsection (1A) below:'.
No. 187, in page 26, line 28, at end insert—
'(1A) No franchise agreement shall be entered into if—
(a) in any case where the agreement would be subject to conditions requiring payments to the Franchising Director under paragraph (a) above, any payment to be rendered to the Franchising Director under the agreement would be less than the projected balance; or


(b) in any case where the agreement would be subject to conditions requiring payments by the Franchising Director under paragraph (b) above, any payment to be rendered to the franchisee under the agreement would be greater than the projected balance.'.
No. 238, in page 26, line 32 at end insert—
'(2A) A franchise agreement shall include provision requiring the franchisee or franchise operator to provide the Franchising Director with such information as he may reasonably require under subsection (2A) of section 23 above.'.

Mr. Harvey: I respect the fact that the late hour means that I must be brief, but it is a pity that we have reached the amendment at this late stage because my colleagues and I believe that it is important.
Earlier today we debated the circumstances in which the Government might sanction the possibility of the franchising director not granting a franchise and, indeed, allowing British Rail to continue to operate the services. I think that it was the late Lord Macmillan who, with reference to privatisation, coined the expression "selling off the family silver". During earlier privatisations, some people felt that the services being sold were undervalued and there were remarks to the effect that if one put a £10 note up for sale at a flyer, it would find some buyers. However, I think that this is the first privatisation in which there has been any suggestion that the Government might pay people to take the family silver away. The amendment would prevent that.
The amendment builds on what I would call not commitments but agreements in principle, accepted by the Minister in Committee. On 2 March we discussed what information British Rail might make available to the franchising director when he was considering how franchises should be awarded. The Minister said:
The hon. Member for North Devon says that we are talking of achieved and prospective business plans. When the franchising director comes to consider what British Rail would need to operate the service for the next 12 months or, indeed, for the next 10 years, that is a perfectly reasonable point. I accept the logic of what the hon. Gentleman says—that the franchising director should be able to extrapolate and, indeed, in discussion with British Rail, look at what the costs will be as well as what they have been during the previous six months. I have no difficulty in accepting that".—[Official Report, Standing Committee B, 2 March 1993; c. 503.]
On 4 March, he said:
On the … issue of franchises, we propose that the franchising director should compare the offers received from the private sector with the cost of providing a British Railways Board operated service. I have already agreed with the hon. Member for North Devon that prospective bids should be compared with prospective costs. That was a valuable debate. The franchising director will have to make a judgment based on value-for-money tests."—[Official Report, Standing Committee B, 4 March 1993; c. 553.]
I deal briefly with the theme of value for money.
The Secretary of State repeated today that if bids were not lower than British Rail operating costs, the possibility of British Rail continuing to operate services could be considered. At a time when the Chief Secretary to the Treasury is floating various grisly possibilities about how to attack the budget deficit, it is unacceptable that any franchise should be awarded at a cost to the taxpayer which exceeds the cost of British Rail continuing to operate a service.
The amendment would codify and formalise the circumstances in which the British Rail cost or, as suggested in the amendment, the projected balance between anticipated costs and revenue should be the benchmark against which private sector bidders would have to make their tenders. I hope very much that the Government will be able to accept that notion, given that they have already accepted the component parts.

Mr. Freeman: Perhaps I may bracket amendment No. 238 with amendment No. 185 and say that I find myself in broad agreement with the hon. Member for North Devon (Mr. Harvey). The House needs to endorse a policy whereby the franchising director can collect a good deal of information from British Rail and, in due course, from franchisees, not only about their historic costs but about their prospective costs. I am happy to give the hon. Gentleman an assurance that we shall incorporate the substance of the amendments into the objectives to be given to the franchising director.
The amendments are perfectly sensible, but I caution that there are certain instances in which it is appropriate to disclose prospective costs to private sector bidders. For example, if a line has been electrified British Rail, or a franchisee, will have information about what I hope would be the declining costs of running railway trains along it. It is important that such information be shared in the invitation to tender process. I stand by the commitment that I gave on 2 March. The point made by the hon. Member for North Devon was sensible, because the franchising director must consider prospective costs and extrapolate them in comparing the bids received.
With regard to value for money, I should not like to accept amendment No. 187, or No. 186 which is related to it, because although the point of principle is clear, the franchising director will know what costs British Rail incurs in running a particular service. BR will run a shadow franchise and the costs will be clear. Therefore, when the director considers other offers from the private sector, including management-employee buy-out bids, he must be careful that against the benchmark of British Rail costs he makes a proper judgment of value for money. If he does not, he will be accountable to the Public Accounts Committee through the Comptroller and Auditor General.
There may be some circumstances in which, because of the timing of expenditure, the franchising director needs to take a view, and I would not want to impose on him too inflexible and rigid a system. If the hon. Gentleman is prepared to accept my assurances that I shall take amendments Nos. 185 and 238 on board, perhaps he will respond by not pressing amendments Nos. 186 and 187.

Mr. Harvey: I accept what the Minister says about amendments Nos. 186 and 187 being perhaps too inflexible, and I am grateful to him for his undertaking on amendments Nos. 185 and 238. I accept the need to give some information to bidders, but I ask that it should not be an automatic matter of course that all potential costs are made known to them—only those that the franchising director considers necessary for the purpose of developing the services in question. If we can reach an understanding on that point, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 24

TRANSFER OF FRANCHISE ASSETS OR SHARES TO FRANCHISE OPERATORS, FRANCHISEES ETC

Amendment made: No. 110, in page 24, line 35, leave out from beginning to end of line 17 on page 26.—[Mr. Freeman.]

Clause 25

OTHER TERMS AND CONDITIONS OF FRANCHISE GREEMENTS

Amendment made: No. 111, in page 26, line 33, leave out subsection (3) and insert—
'(3) Without prejudice to the generality of the provisions relating to property, rights and liabilities that may be included in a franchise agreement, a franchise agreement may include provision requiring the franchise operator—
(a) to acquire from such person as may be specified in the franchise agreement, and to use, such property or rights as may be so specified; or
(b) to undertake such liabilities as may be so specified.
(3A) A franchise agreement may include provisions with respect to the fares to be charged to persons wing the franchised services.
(3B) Subject to any requirements imposed by or under this Act, a franchise agreement may contain any such provisions as the Franchising Director may think fit.'.

No. 112, in page 26, line 41, leave out
'in consequence of any such conditions'

and insert
', or for the making of any other payment, in consequence of any condition or other provision of a franchise agreement'. [Mr. Freeman.]

Clause 26

FAILURE TO AWARD FRANCHISE AGREEMENT

Amendment made: No. 113, in page 26, line 43, leave out from beginning to end of line 40 on page 27.— [Mr. Freeman.]

Clause 29

PASSENGER TRANSPORT AUTHORITIES AND EXECUTIVES: FRANCHISING

Amendment made: No. 114, in page 33, line 22, leave out '26'and insert
'(Failure to secure subsequent franchise agreement),.—[Mr. Freeman.]

Clause 32

PROPOSALS TO DISCONTINUE NON-FRANCHISED ETC. PASSENGER SERVICES

Amendment made: No. 115, in page 36, line 31, leave out 'by or'.—[Mr. Freeman.]

Mrs. Ewing: I beg to move amendment No. 232, in page 36, line 39, leave out 'three'and insert 'six'.
I assure hon. Members that in speaking to the amendment in the names of my hon. Friend the Member for Ynys Môn (Mr. Jones) and myself, I do not intend to detain the House nor to press the amendment to a Division.
Clause 32 defines
Proposals to discontinue non-franchised … passenger services

and gives a clear signal that
the service operator shall give notice of the proposal
of a closure
to the Franchising Director not less than three months before the date specified".
The amendment is not ideological; it relates to the practicalities of life, so I hope that the Government will be able to exercise some flexibility in responding to me. Three months may seem a substantial time in terms of giving notice and allowing a consultation period. However, decisions often coincide with holiday periods. In Scotland, for example, an announcement may be made in June; July and August tend to be our holiday period so it is difficult for organisations to get together to discuss the decision and to reach any formalised conclusion. The same would happen if an announcement were made in November because December and January are months when people may not be on holiday but when they are very much involved with their families over Christmas, new year and Burns night.
I seek an element of flexibility. The three-month period should not be adhered to rigidly. I hope that the Government will give special consideration to a demand clearly expressed by the local community that the three-month period should be extended.

The Minister for Transport in London (Mr. Steve Norris): The hon. Member for Moray (Mrs. Ewing) was kind enough to say that she did not intend to press the amendment. I understand the importance of the issue she has raised. Amendment No. 232 would require operators of the non-franchised passenger services to give, as she said, six months'notice rather than three months'notice. It is the franchising director who is under a duty to secure the continued provision of the service until the regulator decides on the merits of the closure proposal.
There are two issues here. The first is whether three months or six months is the appropriate period in which to give notice to the franchising director so that he can consider whether he should secure a replacement service. Our view has been that three months is an adequate time for that process to take place because it is not subject to the holiday considerations that the hon. Member for Moray mentioned.
If we were to rely only on the three months—if that were the sole determinant of the time available between notice of closure and closure being effected—the hon. Lady would have a perfectly fair point when she says that the time is inadequate. I emphasise that the point at issue is that the required period of notice being three months or six months has no bearing on whether a service continues to be available to passengers. The operator may not discontinue the service until the expiry of the notice period. From that expiry, the franchising director is under a duty to secure the continued provision of the service until the regulator has come to a decision on the closure proposal.
If we extended the amount of notice that the franchising director has from the operator, it would merely eat into the time that the regulator took to consider the closure proposal. How reasonable it was to make the period three, four, five, six or more months would be a matter of commercial judgment. It is fair to say that to keep the figure of three months is not to erect an unreasonable barrier to entry into franchised services. However, I reassure the hon. Lady that the important point is that the period of three months is not a truncated period after which the regulator will give his decision. He will take


whatever time he needs. The franchising director is under an obligation to procure the continuance of the service if the operator, having given notice, then terminates the service. I hope that, with that assurance, the hon. Lady will withdraw the amendment.

Mrs. Ewing: As the Minister has said that the three-month limit will not be applied rigidly, especially as it relates to the regulator, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made: No. 116, in page 37, line 21, leave out 'provide, or'.

No. 117, in page 37, line 42, leave out 'provide, or'.

No. 121, in page 38, line 5, leave out 'continue to provide or'.

No. 119, in page 38, line 36, leave out `by or'.

No. 120, in page 38, line 39, leave out paragraph (a) and insert—
'(a) section (Failure to secure subsequent franchise agreement) above,'.

No. 118, in page 38, leave out line 42 and insert—'to secure the provision of the service.'.—[Mr. Norris.]

Clause 33

PROPOSALS TO DISCONTINUE FRANCHISED ETC. PASSENGER SERVICES

Amendments made: No. 122, in page 39, line 4, leave out 'by or'.

No. 125. in page 40, line 6, leave out 'provide, or'.

No. 123, in page 40, line 12, leave out 'continue to provide or'

No. 124, in page 40, line 40, leave out 'by or'.—[Mr. Norris.]

Clause 34

NOTIFICATION OF PROPOSALS TO CLOSE OPERATIONAL PASSENGER NETWORKS

Amendment made: No. 126, in page 41, line 48, at end insert—
'and shall be under a duty during the interim period to secure the operation of the network or, as the case may be, the part of the network to which the proposed closure relates.'.—[Mr. Norris.]

Mr. Norris: I beg to move amendment No. 127, in page 42, line 4, at end insert—
'(6A) Without prejudice to any subsequent application of this section in relation to the network or the part of the network in question—
(a) if the final decision on the closure question is that the proposed closure will not be allowed to take effect, the Franchising Director shall be under a duty to secure the operation of the network or, as the case may be, the part of the network after the interim period; and
(b) if the final decision on the closure question is that the proposed closure will be allowed to take effect subject to compliance with conditions, the Franchising Director shall be under a duty to comply with those conditions or to secure that they are complied with.'.

Madam Speaker: With this it will be convenient to discuss also Government amendments Nos. 129, 128, 131 to 138, 144, 139 to 143, 145, 152, 146, 147, 149 to 151, 159, 154 to 158, 161 and 163.

Mr. Norris: This is a miscellany of amendments to clauses 32 to 41, which provide for the new closure procedures. They either fulfil commitments that were given in Standing Committee or are drafting inconsequentials.
To deal with the amendments that fulfil the commitments given in Committee, it was suggested that the requirement in clause 36 that the consultative committees must act in accordance with any directions given by the regulator was inappropriate. The House knows that it was never our intention that the regulator should be able to prevent a consultative committee from holding a public hearing when investigating a proposed closure. However, I can understand how clause 36(4)(b) might be interpreted in that way. To rectify that concern, amendment No. 134 deals with that requirement.
Amendment No. 138, which amends clause 39, ensures that any revocation or variation of a condition to a closure consent is published. It is sensible that any decision to vary or revoke conditions attached to a closure should be communicated to all those who received notification of the original decision and it should be displayed in all the stations in the area affected.
The other amendments deal with the experimental services provided for in clause 41. The House is aware that they are, effectively, technical and consequential. The key amendments are amendments Nos. 151 and 155. In the interests of time, I will not go into detail on those unless the House wishes me to do so. I hope that I have assured the House that the amendments are consequential and technical.

Amendment agreed to.

Amendment made: No. 129, in page 42, line 7, at end insert—
the final decision on the closure question" means—
(a) in a case where the decision of the Regulator under section 36(7) below with respect to the proposed closure is not referred to the Secretary of State under section 37 below, that decision; or
(b) in a case where that decision is referred to the Secretary of State under section 37 below, the disposal of that reference by the Secretary of State;
the interim period" means the period beginning with the date mentioned in subsection (5)(b) above and ending four weeks after the date of the final decision on the closure question;'.—[Mr. Norris.]

Clause 35

NOTIFICATION OF PROPOSALS TO CLOSE RAILWAY FACILITIES USED IN CONNECTION WITH PASSENGER SERVICES

Amendments made: No. 128, in page 42, line 42, leave out 'person'and insert'operator'.

No. 130, in page 43, line 25, at end insert—
'and shall be under a duty during the interim period to secure the operation of the relevant facility or, as the case may be, the part of the relevant facility to which the proposed closure relates.'.

No. 131, in page 43, line 29, at end insert—
'(6A) Without prejudice to any subsequent application of this section in relation to the relevant facility or the part of the relevant facility in question—
(a) if the final decision on the closure question is that the proposed closure will not be allowed to take effect, the Franchising Director shall be under a duty to secure the operation of the relevant facility or, as the case may be, the part of the relevant facility after the interim period; and


(b) if the final decision on the closure question is that the proposed closure will be allowed to take effect subject to compliance with conditions, the Franchising Director shall be under a duty to comply with those conditions or to secure that they are complied with.'.

No. 132, in page 43, line 36, at end insert—
the final decision on the closure question" means—
(a) in a case where the decision of the Regulator under section 36(7) below with respect to the proposed closure is not referred to the Secretary of State under section 37 below, that decision; or
(b) in a case where "that decision is referred to the Secretary of State under section 37 below, the disposal of that reference by the Secretary of State;
the interim period" means the period beginning with the date mentioned in subsection (5)(b) above and ending four weeks after the date of the final decision on the closure question;'.—[Mr. Arbuthnot.]

Clause 36

NOTIFICATION TO, AND FUNCTIONS OF, THE REGULATOR AND THE RELEVANT CONSULTATIVE COMMITTEES

Amendments made: No. 133, in page 44, line 24, after 'opinion'insert
', on the basis of the information available to it,'.

No. 134, in page 44, line 33, leave out from 'Regulator'to end of line 34.—[Mr. Arbuthnot.]

Clause 37

REFERENCE TO THE SECRETARY OF STATE OF DECISIONS OF THE REGULATOR CONCERNING PROPOSED CLOSURES

Amendments made: No. 135, in page 46, line 10, at end insert—
'but this subsection is without prejudice to any subsequent proposal for closure.'.

No. 136, in page 46, line 18, leave out first 'the'and insert 'any'.— [Mr. Arbuthnot.]

Clause 39

VARIATION OF CLOSURE CONDITIONS

Amendments made: No. 137, in page 46, line 39. after 'closure'insert
', other than a condition requiring the Franchising Director to secure the provision of a bus substitution service (within the meaning of sections 119 to 124 of the Transport Act 1985),'.

No. 138, in page 46, line 42, at end insert—
'(1A) Where, in exercise of his power under subsection (1) above, the Regulator decides to vary or revoke any closure condition, he shall send a copy of his decision to—
(a) the Secretary of State,
(b) the Franchising Director,
(c) every consultative committee whose area consists of or includes the whole or any part of the area affected by the closure to which the condition relates, and
(d) either—
(i) if the closure in question is one falling within section 32 above, the service operator, within the meaning of that section, or
(ii) if the closure in question is one falling within section 34 or 35 above, the operator of the network, station or light maintenance depot in question who gave the notice required by subsection (1) of the section in question,
and shall publish notice of the decision at every station within the area affected by the closure to which the condition relates.'.

No. 144, in page 47, line 4, after 'section'insert—

'"the area affected", in relation to any closure, shall be construed in accordance with the section under or by virtue of which the Franchising Director was required to publish in connection with that closure the notice referred to in section 36(1) above;'.—[Mr. Arbuthnot.]

Clause 40

BUS SUBSTITUTION SERVICES, ETC.

Amendments made: No. 139, in page 47, line 15, leave out from 'discontinued'to end of line 16.

No. 140, in page 47, line 21, leave out paragraph (b) and insert—
'(b) as if any reference to the imposition of a condition by the Secretary of State were a reference to the imposition of a closure condition under this Part by the Secretary of State or the Regulator;'.

No. 141, in page 47, line 29, after 'State'insert
'(other than a reference to the imposition of a condition by him)'.

No. 142, in page 47, line 32, leave out '35 or 36 above; and'and insert
'36(7) or 37(2) above;
(bb) in subsection (1)(a) of section 119, the words "by the Board" shall be treated as omitted; and'.

No. 143, in page 47, line 40, after 'committee'insert
'established under subsection (2) of section 2 of the Railways Act 1993 or, in relation to the Greater London area, within the meaning of that section, the London Regional Passengers'Committee;'.

No. 145, in page 47, line 43, at end insert—
'(bb) subsection (3) shall be disregarded;'.

No. 152, in page 48, line 5, leave out '35 or 36'and insert '32 or 33'.

No. 153, in page 48, line 6, after '27'insert
'(Transfers of franchise assets and shares) and (Failure to secure subsequent franchise agreement)'.—[Mr. Arbuthnot.]

Clause 41

EXPERIMENTAL RAILWAY PASSENGER SERVICES

Amendments made: No. 146, in page 48, line 19, at end insert
'on any line or from any station'.

No. 147, in page 48, line 21, after 'service'insert
'on any line or from any station'.

No. 148, in page 48, line 25, leave out 'neither to
provide that service nor'and insert 'not'.

No. 149, in page 48, line 28, after 'service'insert
'on any line or from any station'.

No. 150, in page 48, line 35, after 'weeks'insert
'in a local newspaper circulating in the area affected and'.

No. 151, page 48, line 38, leave out subsection (5) and insert—
'(5) In this section "experimental passenger service", in relation to any line or station, means a railway passenger service on that line or from that station which is designated by the Franchising Director as experimental and which either—
(a) was so designated before its introduction; or
(b) before being designated under this section as experimental, was at some time provided on an experimental basis, within the meaning of section 56A of the Transport Act 1962.'.

No. 159, in page 49, line 2, after 'weeks'insert
'in a local newspaper circulating in the area affected and'.

No. 154, in page 49, line 11, after 'experimental'insert

'(a)'.

No. 155, in page 49, line 14, at end insert
'but
(b) if the service is one which has been provided on an experimental basis, within the meaning of section 56A


of the Transport Act 1962, every period during which it was so provided, or during which the provisions of that section had effect in relation to it by virtue of subsection (9A)(b) below, shall be counted as a period during which the service was designated as experimental.
(9A) Where, immediately before the coming into force of section 42(1) below so far as relating to section 56A of the Transport Act 1962 (proposals to discontinue services provided on an experimental basis), a railway passenger service is being provided on an experimental basis within the meaning of the said section 56A—
(a) none of the following provisions, that is to say, sections 32 and 33 above, section 42(2) and (3) below and Schedule 4 to this Act, shall have effect in relation to that service until such time as a franchise agreement is entered into in respect of that service or in respect of some or all of the other railway passenger services provided in the area in which, or on the line on which, that service is provided; and
(b) the provisions of the said section 56A shall continue to have effect with respect to that service—
(i) until the time mentioned in paragraph (a) above, or
(ii) until the service becomes an experimental passenger service under this section,
whichever first occurs.'.

No. 156, in page 49, line 15, after 'section'insert—
'the area affected", in relation to an experimental service on any line or from any station, means the area in which is situated the line or, as the case may be, the station in question.'.

No. 157, in page 49, line 16, leave out 'under'and insert
'in satisfaction of requirements imposed by'.
No. 158, in page 49, line 18, leave out 'under'and insert 'in satisfaction of requirements imposed by'.—[Mr. Arbuthnot.]

Clause 56

RESPECTIVE FUNCTIONS OF THE REGULATOR AND THE DIRECTOR GENERAL OF FAIR TRADING, AND FUNCTIONS OF THE MONOPOLIES COMMISSION

Amendments made: No. 4, in page 62, line 31, leave out 'commercial activities connected with'and insert 'the supply of'.

No. 5, in page 64, line I, leave out subsection (10).—[Mr. Norris.]

Clause 60

KEEPING OF REGISTER BY THE REGULATOR

Amendment made: No. 161, in page 66, line 34, leave out '41(1)'and insert '41(2) or (3)'.—[Mr. Arbuthnot.]

Clause 61

KEEPING OF REGISTER BY THE FRANCHISING DIRECTOR

Amendments made: No. 162, in page 67, line 28, at end insert—
'and, without prejudice to the generality of paragraph (c) above, "amendment" in that paragraph includes any variation of the property, rights and liabilities which from time to time constitute the franchise assets in relation to the franchise agreement in question, whether the variation is effected in accordance with the terms of, or by an amendment made to, the franchise agreement.'.

No. 6, in page 67, line 31, leave out 'section 59(2)(a) and (b) above'and insert
'paragraphs (a) and (b) of section 59(2) above, for this purpose taking references in those paragraphs to the Regulator as references to the Franchising Director.'.—[Mr. Norris.]

Clause 62

ANNUAL AND OTHER REPORTS OF THE REGULATOR

Amendment proposed: No. 7, in page 68, line 9, after 'shall'insert 'include'.—[Mr. Norris.]

Mr. Harvey: In the Standing Committee, I moved an amendment standing in my name and that of members of the all-party disablement group. At that time the Minister agreed to accept the amendment in principle and come back with a reworking of it. As yet, I have not seen any sign of any such amendment. The Minister specifically said that he would reflect on how to give effect to the meaning of the amendment. It may be that he is still reflecting on it. Is it his intention to table an amendment in another place? I shall be pleased to hear about that.

Mr. Freeman: Amendment No. 7 fulfils the commitment that I gave to my hon. Friend the Member for Exeter (Sir J. Hannam) but, more specifically, the hon. Member for North Devon (Mr. Harvey).
If the hon. Member is not satisfied that we have fulfilled our commitment in connection with the disabled, perhaps he will communicate with me. I give an undertaking that then we shall consider the matter in another place. The matter should not be controversial. Clear commitments were given that in the annual report of the regulator reference would be made to not only the employment of disabled people but facilities for them.

Mr. Harvey: The Minister may be confused about the subject matter. The amendment to which I referred dealt with a code of practice governing facilities for passengers on the railways. It did not cover employment. It dealt with how the Disabled Persons Transport Advisory Committee was to be involved in communication with the regulator. Welcome as the string of amendments are, they do not deal with that subject.

Mr. Freeman: I certainly recollect that commitment. The hon. Gentleman is right: it is not covered by amendment Nos. 7 to 11. I assure him that we shall return to the subject in another place. We have not yet reached the right conclusion. I shall write to the hon. Gentleman tomorrow.

Mr. Peter Bottomley: I do not seek a commitment from my hon. Friend the Minister, but will he consider asking the chairman of the advisory committee to provide an open letter to the Secretary of State giving the views of the committee on the position in the Bill as it appears to the committee?

Mr. Freeman: We have already received an opinion from the previous chairman. I shall write to the present chairman and ask him to write to my right hon. Friend the Secretary of State on that point.

Amendment agreed to.

Amendments made: No. 8, in page 68, line 10, leave out 'include'.

No. 9, in page 68, line 12, at end insert—
(aa) general surveys of any developments during that year which relate to—
(i) the provision of railway passenger services or station services for, or the use of such services by, persons who are disabled; or
(ii) the employment by licence holders of persons who are disabled;'.

No. 10, in page 68, line 13, leave out 'set'and insert 'a statement setting'.

No. 11, in page 68, line 15, leave out 'include'.—[Mr. Arbuthnot.]

Clause 63

ANNUAL REPORTS OF THE FRANCHISING DIRECTOR

Amendment made: No. 12, in page 69, line 7, leave out 'section 59(2)(a) and (b) above'and insert
'paragraphs (a) and (b) of section 59(2) above, for this purpose taking references in those paragraphs to the Regulator as references to the Franchising Director.'.—[Mr. Arbuthnot.]

Clause 65

GENERAL. DUTIES OF CONSULTATIVE COMMITTEES

Amendment made: No. 163, in page 71, line 28, leave out '35 to 41 above'and insert
'32 to 41 above or Schedule 4 to this Act.'.—[Mr. Arbuthnot.]

Clause 68

POWER OF THE FRANCHISING DIRECTOR TO REQUIRE INFORMATION FROM THE BOARD AND ITS WHOLLY OWNED SUBSIDIARIES

Amendment made: No. 13, in page 74, leave out lines 22 to 37.—[Mr. Arbuthnot.]

Clause 71

MEANING OF "RAILWAY SERVICES" ETC

Amendment proposed: No. 14, in page 77, line 44, at end insert
'and references to carrying, or to the carriage of, passengers by railway shall be construed accordingly.'.—[Mr. Norris.]

Madam Speaker: With this it will be convenient to take Government amendments Nos. 15, 16, 167, 17, 18, 19, 20, 21, 83 and 108.

Dr. Marek: Will the Minister say something about amendment No. 14? I have been looking out for the implementation of the car parking provisions. I wonder whether this group of amendments contains an amendment on that subject. That may be the case. If so, I apologise to the Minister.
There is a problem with car parking, certainly in the London area. It is feared that franchisees will use railway car parks for purposes other than car parking. Can the Minister help me on that matter?

Mr. Norris: I remember well the debates that we had in Committee on that point. The amendments make it clear that the term "station services" includes car parking. That means, for example, that where the clause 4 powers impose a duty on the regulator to protect the interests of users of railway services, that includes station services. That duty would include protecting the interests of the users of the car parks at stations.
To that extent, the amendment provides the hon. Gentleman with the reassurance that he seeks. He and I debated on a previous occasion the effect of planning law on surplus assets. That is perhaps more relevant to the point that the hon. Gentleman wanted to make. I have been advised that amendment No. 14 addresses the point that he made in Committee.

Amendment agreed to.

Amendment made: No. 15, in page 77, line 46, at end insert—
'and, for the purposes of the above definitions of "network services" and "station services", where a person permits another to use any land or other property comprised in a network or station he shall be regarded as providing a service which falls within the meaning of "network services" or "station services", as the case may be.'.—[Mr. Arbuthnot.]

Clause 72

INTERPRETATION OF PART I

Amendments made: No. 166, in page 79, line 17, leave out '24(4)'and insert—
(Transfers of franchise assets and shares) (8)'.

No. 164, in page 79, leave out lines 20 and 21.

No. 165, in page 79, leave out lines 31 and 32.

No. 16, in page 80, leave out lines 1 and 2 and insert—
'"locomotive" means any railway vehicle which has the capacity. for self-propulsion (whether or not the power by which it operates is derived from a source external to the vehicle);'.

No. 167, in page 80, leave out lines 3 and 4.

No. 17, in page 80, line 8, after 'with' insert
'any of the track comprised in'.

No. 18, in page 80, leave out lines 10 to 12 and insert—
'"together constituting a system of track and other installations which is used for and in connection with the support, guidance and operation of trains carrying passengers or goods.'.

No. 19, in page 80, line 45, at end insert—
'"railway vehicle" includes anything which, whether or not it is constructed or adapted to carry any person or load. is constructed or adapted to run on flanged wheels over or along track;'.

No. 20, in page 81, leave out lines 25 to 27 and insert—
'"train" means—
(a) two or more items of rolling stock coupled together, at least one of which is a locomotive; or
(b) a locomotive not coupled to any other rolling stock; "vehicle" includes railway vehicle.'.—[Mr. Arbuthnot.]

Clause 73

POWERS OF THE BOARD TO FORM COMPANIES

Amendment made: No. 168, in page 81, line 47, after '31'insert
'(Transfers of franchise assets and shares) and (Failure to secure subsequent franchise agreement)'.—[Mr. Arbuthnot.]

Clause 74

POWERS OF THE BOARD TO MAKE TRANSFER SCHEMES

Amendments made: No. 169, in page 82, leave out lines 28 and 29 and insert—
'(d) the Franchising Director, or
(e) any company which is wholly owned by the Franchising Director,'.

No. 170, in page 82, line 30, at end insert 'or to a franchise company.'.

No. 171, in page 83, leave out lines 1 to 3 and insert—
'(c) for the purpose of effecting any transfer contemplated by section '(Transfers of franchise assets and shares) above,'.

No. 172, in page 83, line 26, leave out subsection (7).

No. 174, in page 83, line 39, leave out from beginning to end of line 6 on page 84 and insert—
'(9) In this Part, "franchise company" means any body corporate which is, or is to be, the franchisee or the franchise operator under a franchise agreement.'.

Clause 75

TRANSFER TO THE SECRETARY OF STATE OR THE FRANCHISING DIRECTOR OF THE BOARD'S FUNCTION OF MAKING TRANSFER SCHEMES

Amendment made: No. 21, in page 84, line 20, leave out
'a franchise company or the Regulator;'

and insert
'or a franchise company;'.

Clause 76

TRANSFERS OF SHARES OF CERTAIN COMPANIES: PROVISIONS SUPPLEMENTAL TO SECTIONS 73 TO 75

Amendments made: No. 179, in page 85, line 9, leave out 'or a franchise company'.

No. 177, in page 85, line 10, leave out 'or franchise company'.

No. 178, in page 85, line 13, leave out
'neither the Board nor any nominee of the Board'

and insert
'none of the following persons, that is to say, the Board, any wholly owned subsidiary of the Board or any person acting on behalf of the Board or its wholly owned subsidiaries,'.

No. 176, in page 85, leave out lines 20 and 21 and insert—
'(5) None of the following persons, that is to say, the Franchising Director, any company which is wholly owned by the Franchising Director or any person acting on behalf of the Franchising Director or any such company, shall dispose of any shares of a company which is wholly owned by the Franchising Director except—'.

No. 175, in page 85, leave out line 37 and insert
'by the Franchising Director, any company which is wholly owned by the Franchising Director or any person acting on behalf of the Franchising Director or any such company.'.—[Mr. Arbuthnot.]

Clause 83

POWER OF THE SECRETARY OF STATE OR THE FRANCHISING DIRECTOR TO REQUIRE PROVISION OF INFORMATION IN CONNECTION WITH TRANSFER SCHEMES

Amendments made: No. 180, in page 90, line 22, after 'functions', insert
'conferred on him by section (Powers of the Franchising Director to make transfer schemes) above or'.

No. 181, in page 90, line 33, leave out 'and any franchise company'and insert
'any franchise company and any company which is wholly owned by the Franchising Director.'.—[Mr. Arbuthnot.]

Clause 84

FUNCTIONS OF SECRETARY OF STATE IN RELATION TO TRANSFER SCHEMES

Amendment made: No. 182, in page 91, line 34, leave out from 'scheme'to 'unless'in line 37 and insert
'made by the Board or the Franchising Director, otherwise than under section (Powers of the Franchising Director to make transfer schemes) above, shall not come into force'.—[Mr. Arbuthnot.]

Clause 85

SUPPLEMENTARY PROVISIONS AS TO TRANSFERS BY TRANSFER SCHEME

Amendment made: No. 184, in page 92, line 6, leave out 'section 74(6)'and insert

'sections 74(6) and (Powers of the Franchising Director to make transfer schemes) (4)'.—[Mr. Arbuthnot.]

Clause 97

GRANTS TO THE BOARD

Amendments made: No. 39, in page 99, line 33, at beginning insert '(a)'.

No 40, in page 99, line 33, at end inset 'or
(b) without prejudice to paragraph (a) of this subsection, for the purpose of enabling that Board to make any payment (whether by way of repayment of principal or payment of interest or of any other description) in respect of any loan made to them under section twenty of this Act.'.—[Mr. Arbuthnot.]

Clause 99

EXTINGUISHMENT OF CERTAIN LIABILITIES OF THE BOARD

Amendment made: No. 41, in page 100, leave out lines 14 to 19.—[Mr. Arbuthnot.]

Clause 101

TAXATION PROVISIONS

Amendment made: No. 70, in page 100, line 31, leave out 'taxation'and insert
'stamp duty and stamp duty reserve tax'.—[Mr. Arbuthnot.]

Clause 103

THE SECRETARY OF STATE, THE FRANCHISING DIRECTOR AND THE BOARD NOT TO BE REGARDED AS SHADOW DIRECTORS OF CERTAIN RAILWAY COMPANIES ETC.

Amendments made: No. 71, in page 101, line 35, at end insert—
'(aa) any company which is wholly owned by the Franchising Director;'.

No. 72, in page 102, line 11, after '74(6)'insert
'or, as the case may be, (Powers of the Franchising Director to make transfer schemes)(5)(b)'.—[Mr. Arbuthnot.]

Clause 109

RAILWAY HERITAGE

Mr. Bayley: I beg to move amendment No. 48, in page 106, line 14, after 'Board', insert 'or any franchise operator'.

Madam Speaker: With this it will be convenient to discuss the following amendments: Government amendment No. 22.
No. 49, in page 106, line 17, after 'subsidiary', insert 'or the franchise operator'.
No. 50, in page 106, line 24, after 'Board', insert 'or any franchise operator'.
No. 51, in page 106, line 26, after first 'Board', insert 'or any franchise operator'.
No. 52, in page 106, line 29, after 'subsidiary', insert 'or franchise operator'.
No. 53, in page 106, line 34, after first 'Board', insert 'or any franchise operator'.
No. 54, in page 106, line 36, after 'subsidiary', insert 'or franchise operator'.
No. 55, in page 106, line 37, at end insert—
'—provided that
(i) the Public Record Offices and the National Railway Museum shall be given priority of claim on records and artefacts originating in or presently held by the public sector and that the National Railway Museum shall be given priority of claim on records and artefacts created by franchise operators; and
(ii) Transfers of records and artefacts'to the Public Record Offices and the National Railway Museum shall be without consideration.'.

Mr. Bayley: One day. everything set in place by this Bill will be history. All the privatised trains and rolling stock will have reached the end of their useful life and will be scrapped. Under section 144 of the Transport Act 1968, the National Railway museum has the right to claim, at no cost, redundant railway equipment, and although the Bill brings in a similar provision for public sector railway companies, it makes no similar provision for the equipment of private sector railway companies. This group of amendments seeks to do that.
The Government say that they intend to move as quickly as they can from a regime of publicly owned railways to one of privately owned railways. If the National Railway museum is to remain a major excellent repository for our country's railway heritage, there must be provision for it to claim redundant railway equipment from private sector operators. We are talking about redundant equipment that has reached the end of its useful life and has only a scrap value. I urge the Government to think again on this point.

Mr. Freeman: I will not commend this group of amendments to the House, but I can give the hon. Gentleman the assurance that the Government want the National Railway museum in York, in the hon. Gentleman's constituency, to thrive and prosper.
It is quite right that there should be controls over British Rail and public sector assets, but I believe that assets acquired by the private sector should be negotiated for acquisition by the museum, and there should be no compulsion.
However, I give the hon. Gentleman and all those interested in the National Railway museum—who included, of course, the late Robert Adley-the assurance that the Department will work closely with the trustees and the director of that museum to make sure that it is a proper and fitting tribute to the railway system.
I hope that, with those assurances, the hon. Gentleman will not press the amendment.

Mr. Bayley: I will not press the amendment, in view of the Minister's statement.

Madam Speaker: Is the hon. Gentleman withdrawing the amendment? Will he make it quite clear?

Mr. Bayley: I am, Madam Speaker.

Amendment, by leave, withdrawn

Amendment made: No. 22, in page 106, line 15, after 'artefact'insert
'which it owns and which is'.—[Mr. Arbuthnot.]

Clause 118

GRANTS AND SUBSIDIES

Amendments made: No. 73, in page 112, line 45, at end insert—

'(1A) The Secretary of State shall be the competent authority of Great Britain, in relation to persons who operate services for the carriage of goods by railway, for the purposes of the public service obligations regulations.'.

No. 77, in page 113, line 3, leave out 'and'.

No. 79, in page 113, line 5, at end insert
'and
(d) to the extent specified in subsection (3A) below
(i)every non-metropolitan county or district council in England or in Wales and every regional or islands council in Scotland, and
(ii) every London borough council and the Common Council of the City of London,'.

No. 74, in page 113, leave out line II and insert 'railway passenger services'.

No. 75, in page 113, line 17, at end insert—
'(3A) For the purposes of subsection (2) above—
(a) a council falling within paragraph (d)(i) of that subsection shall only be the competent authority in relation to those railway passenger services whose Provision the council secures under section 63 of the Transport Act 1985 (passenger transport in areas other than passenger transport areas); and
(b) a council falling within paragraph (d)(ii) of that subsection shall only be the competent authority in relation to those railway passenger services in respect of which the council enters into and carries out agreements under section 59 of the London Regional Transport Act 1984 (provision of extra transport services in London).'.

No. 76, in page 113, line 21, leave out `services for the carriage of passengers by railway'and insert 'railway passenger services'.

No. 78, in page 113, line 36, leave out subsection (7) and insert—
'(7) A statutory instrument containing an order under subsection (6) above shall not be made unless a draft of the instrument has been laid before and approved by a resolution of the House of Commons.'.—[Mr. Norris.]

Clause 130

GENERAL INTERPRETATION

Amendments made: No. 83, in page 120, line 8, at end insert—
'"the Monopolies Commission" means the Monopolies and Mergers Commission;'.

No. 80, in page 120, line 24, after '74'insert

'or (Powers of the Franchising Director to make transfer schemes)'.

No. 81, in page 120, line 28, leave out from `when'to end of line 32 and insert
'it has no members other than—
(a) the Secretary of State, the Franchising Director or a Government department,
(b) a company which is itself wholly owned by the Crown, or
(c) a person acting on behalf of the Secretary of State, the Franchising Director, a Government department or such a company.'

No. 82, in page 120, line 32, at end insert—
'(2A) For the purposes of this Act, a company shall be regarded as "wholly owned by the Franchising Director" at any time when it has no members other than—
(a) the Franchising Director,
(b) a company which is itself wholly owned by the Franchising Director, or
(c) a person acting on behalf of the Franchising Director or such a company.'.—[Mr. Norris.]

Clause 132

SHORT TITLE, COMMENCEMENT AND EXTENT

Amendments made: No. 23, in page 121, line 23, after '129,'insert '(Crown application)'.

No. 84, in page 121, line 24, at end insert—
'() section (power to make consequential modifications in other Acts etc.);'.[Mr. Norris.]

Schedule 1

THE REGULATOR AND THE FRANCHISE DIRECTOR

Amendments made: No. 85, in page 122, line 38, after '(b)'insert
'except as otherwise provided by this Act,'.

No. 86, in page 122, line 40, after `(c)'insert
'expect as otherwise provided by this Act,'.—[Mr. Norris.]

Schedule 7

TRANSFERS BY TRANSFER SCHEME

Amendments made: No. 87, in page 141, line 6, after `where'insert '(a)'

No. 88, in page 141, line 8, at end insert 'and
(b) the transfer scheme in question is made otherwise than under section (Powers of the Franchising Director to make transfer schemes) of this Act.'.

No. 24, in page 142, line 47, leave out 'it'and insert 'he'.

No. 25, in page 144, line 6, leave out 'itself'and insert 'himself.

No. 26, in page 146, line 17, leave out 'it'and insert 'he'.

No. 27, in page 146, line 19, leave out first 'it'and insert 'him'.

No. 28, in page 146, line 19, leave out second 'it'and insert 'he'.—[Mr. Norris.]

Schedule 8

TAXATION PROVISIONS

Amendments made: No. 89, in page 146, line 27, leave out from beginning to end of line 27 on page 155.

No. 90, in page 155, line 29, leave out 'this Part of'.

No. 91, in page 155, line 31, leave out 'has the same meaning as in Part I of this Schedule'and insert
'means a transfer scheme, if and to the extent that it provides for the transfer of property, rights or liabilities from a body or person falling within any of paragraphs (a) to (e) of section 74(1) of this Act to another such body or person.'.

No. 92, in page 155, line 32, leave out 'this Part of.

No. 93, in page 155, line 42, leave out '(a)'.

No. 94, in page 155, line 44, leave out 'or'.

No. 95, in page 155, line 45, leave out `(b)'and insert—
'(2A) Stamp duty shall not be chargeable on any instrument or agreement which is certified to the Inland Revenue by the Secretary of State-—
(a) as made'.

No. 105, in page 156, line 3, at end insert 'and
(b) as operating in favour of no person who does not fall within paragraphs (a) to (e) of section 74(1) of this Act.'.

No. 97, in page 156, line 10, leave out sub-paragraph (4).

No. 98, in page 156, line 17, leave out `to (4)'and insert '(2), (2A) and (3)'.

No. 99, in page 156, line 23, at end insert—
'(6) Section 12 of the Finance Act 1895 (collection of stamp duty in cases of property vested by Act or purchased under statutory power) shall not operate to require—

(a) the delivery to the Inland Revenue of a copy of this Act, or
(b) the payment of stamp duty under that section on any copy of this Act,
and shall not apply in relation to any instrument on which, by virtue of the preceding provisions of this paragraph, stamp duty is not chargeable.'.

No. 100, in page 156, line 25, leave out `No agreement'and insert
'An agreement to transfer chargeable securities, as defined in section 99 of the Finance Act 1986, to a person falling within paragraphs (a) to (e) of section 74(1) of this Act shall not give rise to a charge to stamp duty reserve tax if the agreement is'.

No. 101, in page 156, line 26, leave out `by'.

No. 102, in page 156, line 27, after '(a)'insert `by'.

No. 103, in page 156, line 28, after `(b)'insert 'by'.

No. 104, in page 156, line 30, after `(c)'insert `by'.

No. 96, in page 156, leave out lines 31 to 39 and insert—
'(2) An agreement shall not give rise to a charge to stamp duty reserve tax if the agreement is made in pursuance of Schedule 7 to this Act in connection with a restructuring scheme made as mentioned in paragraph (a), (b) or (c) of sub-paragraph (1) above.'.—[Mr. Norris.]

Schedule 13

REPEALS

Amendment made: No. 108, in page 175, line 26, column 3, at end insert 'Sections 69, 70 and 71.'.—[Mr. Norris.]

Order for Third Reading read.—[Queen's Consent, on behalf of the Crown, and Prince of Wales's Consent, on behalf of the Duchy of Cornwall, signified.]

Mr. MacGregor: I beg to move, That the Bill be now read the Third time.
There is widespread agreement in the country that we should make better use of our railways. That is reflected in the report of the Select Committee on Transport to which we made a positive response last week. The Bill provides us with the opportunity to take forward our reforms which will ensure that the improvements in British Rail in recent years-I have constantly paid tribute to the management, the staff and the board for those improvements-are advanced further. I am confident that the new structure contained in the Bill will be very much to the benefit of passenger services, passengers, freight and employees on the railway.
The Government's policy was first set out in a White Paper last July. The detail of that policy has since been developed in a series of consultative documents and policy statements issued during the passage of the Bill. In addition, a long series of debates took place in Standing Committee and, as a result of points of view expressed there, a considerable number of amendments have been made on Report. That demonstrates that we have been listening and have been determined to ensure that, concomitant—

It being Ten o'clock, further proceedings stood adjourned.

Motion made, and Question put forthwith, pursuant to Standing Order No. 14 (Exempted business),
That, at this day's sitting, the Railways Bill may be proceeded with, though opposed, until any hour.—[Mr. Robert G. Hughes.]

Question agreed to.

Question again proposed, That the Bill be now read the Third time.

Mr. MacGregor: Concomitant with our policy and objectives, we are prepared to make changes where we think that the case has been made out. I should like to pay a particular tribute to my hon. Friend the Minister for Public Transport for all that he has done on the Bill and to my hon. Friends who have supported him.
Throughout the process, our policy and the principles underlying it have remained clear and consistent. We believe that the best future for the railways lies in involving the private sector in their operation and management to the maximum possible extent.
There is no reason why railways should be denied the benefits that the injection of private sector initiative and discipline and the approaches of the private sector have brought other industries. However, the railways are special and the involvement of the private sector in the railways requires new and imaginative solutions.
Our proposals for franchising passenger services are an example of that. Yesterday, I announced our plans for restructuring the remainder of British Rail's passenger services. We had already announced the first seven franchises and yesterday I announced a further 18; the services will be organised into 25 separate groups to provide the basis for transferring the provision of all British Rail's passenger railway services to the private sector. The groups are based on the need to reflect operational common sense, to produce packages that will be attractive to bidders and to bring back a sense of local and regional identity, and, I hope, a sense of pride in the railways.
I repeat what I said earlier today, in view of some of the slightly misleading comments that were made this morning on those 25 franchises. They are not all happening at once or in the near future. It is a gradual process of development of the franchises to make sure that we proceed in a way that makes the policy work properly operationally and does not cause any problems in the process.

Mr. Dykes: That presumably means that my right hon. Friend categorically accepts the principles in paragraph 537 of the report of the Select Committee on Transport which makes similar suggestions.

Mr. MacGregor: I do not have paragraph 537 in front of me, but it is another way in which we have worked with the Select Committee. We have based the division of the franchises very much along the lines that the Select Committee requires.
Our proposals are also pragmatic. The Government are fully aware of the importance of the industry to our country and to the economy. We cannot and will not take risks with the railways; hence our firm commitments to maintaining the network and to continuing public subsidy for socially necessary services and our commitments to rigorous closure procedures and safeguards to ensure continuity of services.
The Opposition have tried to misrepresent our policies, stirring up unjustified concerns among passengers, employees in the industry and pensioners. There is no better example than pensioners. The proposals we announced last week demonstrate just how unfounded those concerns were.
Our policy for the railways is also realistic. There is no magical solution to the structural decline that the railways have suffered since the 1930s, but the Government are

firmly committed to ensuring that the railways get the best possible opportunity to make the most of their advantages. That is clear in respect of freight.
We all know that there is a big challenge if the railways are to increase the amount of freight they carry and to halt the decline from rail to road. I elaborated some of the problems yesterday, but I believe that the establishment of the three new geographically based companies out of British Rail's existing trainload freight and contract services offers the prospect of an innovative, competitive freight railway in the private sector, combined with the other policies of open access and the various subsidy arrangements that I announced on Second Reading. In the last two days, we have not had much time to dwell on the issue of freight, but I believe that our policies undoubtedly offer the best way forward in that respect for the railways.
The Bill will enable us to deliver all those policies. It is now ready to go to another place. It has been carefully examined and extensively debated in more than 100 hours of consideration in Standing Committee, and I commend it to the House.

Mr. Prescott: The Bill has absolutely nothing to do with improving facilities for passengers. It has nothing to do with reintroducing pride into the railway system. It certainly has nothing to do with common sense. It has everything to do with the ideological obsession of the Government to change the ownership of British Rail from a publicly owned facility meeting public needs to a privately owned company concerned with private greed.
The Government have made it clear during the 100 hours of discussion, and in our last two days of debate, that they do not see the Bill as having anything to do with competition. The idea that changing ownership will bring about competition and introduce an entrepreneurial climate through a privatised culture has been exploded in all our debates. It has nothing to do with competition. It has only to do with the replacement of a public monopoly with a private monopoly.
Nor has the Bill anything to do with the market deciding fares, taking account of what the market can provide—the principle of the market philosophy—because the Secretary of State made it clear today that all fares will be controlled by a regulator. Clearly, the market philosophy cannot apply in those circumstances.
The changes that have taken place—there have been many—have come about because the Government have realised that the Bill is impractical in the running of a railway system. So much is that the case that one of the first and major changes to be made by the Secretary of State was to ensure that, up to December 1996, the powers of the regulator and the franchise operators and directors shall be subjected to the right hon. Gentleman's control.
In other words, the right hon. Gentleman is imposing political control over and above the bodies that he is setting up to see that competitive forces play a part in the railways. They will not play such a part and he knows it. Indeed, if the regulator took action to defend his position in relation to his powers in the Bill, the Secretary of State could overrule him. So the right hon. Gentleman has taken out a form of insurance. I assume that that will not be the present Secretary of State, who will be in his current job for only a short time longer. If he moves to the Treasury


and does the job as well there as he has done at the Department of Transport, heaven help us. The mess will continue.
I have not witnessed in my 20 years in the House a Bill that has been so unanimously opposed by so many bodies, which have made their views known in many articles. Passenger boards and consumer groups have made clear their unhappiness with the Bill. Potential bidders for the operation, freight and passenger services, have moved away from offering their services and have said that it is not a good Bill from their point of view.
The employees have shown that the conditions that will apply to them and the redundancies that will affect them are unacceptable. Although the right hon. Gentleman has spoken of improved pensions, many of my hon. Friends and others believe that it is still one of the main intentions of the Bill to secure the possibility of pinching the £4 billion of assets remaining in the pension funds.
Consumer bodies have sent copies of their views to hon. Members in all parts of the House explaining the ways in which they are not happy with the Bill. Members of the Select Committee on Transport, representative of both sides, under the distinguished chairmanship of the late Mr. Robert Adley, expressed their view that the Bill will not achieve its declared aim of producing a better railway system.
The final absurdity must be hearing the Secretary of State confirm his ideological prejudice which will not allow him to permit British Rail to bid for franchises, even though it has the expertise to do so. He accepts that British Rail will still be the operator if private operators do not take up the services—good old BR will have to step in and do that. But, unlike the nationally owned Swedish system, BR will not be able to bid for franchise operations.
It is absurd to agree to the French rail system bidding for the franchise operations here, but that is what the Secretary of State has done. It is a publicly owned body with all the characteristics that the right hon. Gentleman dislikes. This is quite unacceptable and I should have expected the Secretary of State to think so, too.
I have no doubt that the right hon. Gentleman was happy about the French buying into our water and power systems; now the same will happen to the railways. Why is he so prejudiced against British operations and British ownership? The only possible advantage is that Britain might now obtain the French TGV—it is a far better train than the ones that we have, because BR has been starved of the funds necessary to maintain an adequate system.
This Bill and its effects were best summed up by Sir Peter Parker, the former chairman of British Rail, in The Guardian. Having read the Bill and our debates, he said, describing the kind of railway system that we are now to inherit:
Potential operators will not 'own'the service but have a short-term franchise. Their timetable will be specified by the franchise director, track charges and train paths will be determined by Railtrack; their trains will be owned by a leasing company while fares will be controlled. The driver, signalman and platelayer will work for separate companies. I used to talk of the age of the train, but we are moving into the age of the origami railway.
We are talking about running a rail system in bits and pieces. It cannot produce the integrated service which will

be essential for the 21st century. Such a service is also essential to reduce congestion and minimise environmental damage.
The one saving grace of this major change and splitting up of assets is that it will be easier for us to return the railway system to a publicly owned, publicly accountable system. Polls have shown that 71 per cent. of the public would prefer that to the ideas of the Secretary of State. We shall return the railways system to that state and I tell all potential bidders to bear that possibility in mind when they bid for their short-term franchises.

Mr. Alan Haselhurst: I suppose that there are two main reasons why the Government have found it difficult to achieve unanimity on this issue. First, although it is complicated and detailed, this is an enabling Bill, and many issues remain to be resolved outside the framework of the legislation.
Secondly, moving into a new era for the railways, we have to ask ourselves a great many questions about how the future will turn out. People seek guarantees; they want to know whether things will stay the same as they have known them. It is difficult to answer such questions.
Inevitably, the Select Committee report was sceptical about whether the new system will work. Not everyone will be satisfied until it has been seen to work. The test ultimately is whether the system will fit together more coherently than the hon. Member for Kingston upon Hull, East (Mr. Prescott) is prepared to admit.
One of the great arguments has been about whether the relationship between the franchisees and Railtrack is the right one. That is still to be determined by the contractual arrangements and the exact terms of the franchises. It remains to be seen whether many people will want to run the railways. I believe, on the evidence, that they will. That will be the test; if no one comes forward, the Government will have been shown to be wrong and British Rail will still exist. But I believe it likely that bidders will present themselves and offer us a better prospect for the railways.
I believe that the competition that the Government want will be secured by the obtaining of franchises rather than by on-rail competition. I have learnt from the Select Committee investigation that on-rail competition offers few opportunities. I think that the Government would do better to banish the idea that there will be much on-rail competition in the new era, thus putting in place the very best franchise arrangements—arrangements that will instil the greatest confidence in the continued successful operation of the railways.
Much will depend on the extent of investment in the railways. The Government have been frank: they have made it clear that they recognise the need for the public sector to provide investment for major capital infrastructure. That is indeed important. The question is, to what extent will the new arrangements enable extra cash to be advanced? I believe that there is room for manoeuvre, and that the railways will receive more money and become more efficient.
The Opposition have accused us of dogmatism. I hope that many Conservatives believe in private enterprise: I hope that they believe that private management produces better ideas, leading to more efficient running of the


railways. I also hope that these proposals will show that belief to be true, as other Government proposals have done.

Mr. Cryer: The Secretary of State described the Bill as a measure whose aim was to achieve a better use of British Rail. That is ironic: if there is one measure designed to undermine British Rail and, in so doing, undermine a national network of passenger services, it is this appalling legislation, which is a recipe for bureaucracy. There will be a franchising director, a regulator and hundreds of people engaged in producing the thousands of contracts which even the Department of Transport acknowledges will be necessary to implement the Bill. Energy will be devoted not to the production of a better railway system, but to the production of a crazy system of franchising and contracting. When companies go into liquidation, passengers will know what has happened, because the trains will cease to run: that, at least, can be guaranteed.
A national network, built up over the years by a dedicated work force, is being eroded. InterCity will be broken up into franchises. The Bill is a kick in the teeth for the thousands of men and women who have striven to provide a decent public service, despite Government cuts and the deep, inbuilt prejudices of Ministers—including those in the Cabinet—against publicly owned services.
The Secretary of State talked of a sense of local or regional identity. The passenger transport authorities, working with British Rail, are already dealing with that. In west Yorkshire, the PTA—which has some sort of democratic accountability—already provides an excellent supplement to services and an excellent sense of local identity. The only difficulties experienced there result from the Government's hamfisted approach.
The Secretary of State talked of freight haemorrhaging away from British Rail and pouring on to the roads. It is hardly surprising that that should be happening, with the present Secretary of State and the present Minister of State in charge of road transport. The Bill will increase the flow of traffic away from rail and on to the road, at the very time when most sensible people recognise that the transport of both people and freight should be moving in the opposite direction.
One clear message emerges from the Bill: everyone who votes for it will be voting to sabotage our national railway network.

Mr. Rathbone: The House, those listening to the debate at this late hour and those who will read about it tomorrow will be struck by the disgraceful, backward-looking, depressing speeches that we have just heard on Third Reading from Opposition Members. It is tragic that after all the debate that has taken place and all the actions of the Government, particularly their decisions and promises over the last two days, the Opposition cannot even pay lip service to what my right hon. Friend the Secretary of State and my hon. Friend the Minister have done.
I put on record the thanks of my hon. Friends to the Secretary of State and to the Minister for their hours of listening, their positive reactions and their guarantees so that the Bill goes from this House to the other place in a much better state than at the beginning of the debate yesterday.
I wish to raise three minor points. First, may I ask for reassurance from my right hon. Friend that where it is appropriate vertical integration of rolling stock and infrastructure will be allowed under the franchise system? Secondly, can he please give us some indication of the Government's attitude towards the future funding of British Rail, since British Rail itself will remain responsible for quite a large proportion—[Interruption.]

Madam Speaker: Order. The House must come to order and listen to the hon. Gentleman who has the floor. Conversation may take place, but quietly, so that the hon. Gentleman may be heard. That includes hon. Ladies.

Mr. Rathbone: Opposition Members do not wish to hear. They did not want to listen to any of the debate over the last two days, so their behaviour now is not reprehensible.
I was asking for reassurance on the Government's intentions as to finance being available for British Rail in the interim until all the franchises have been let because a considerable amount of the rail network will remain the responsibility of British Rail in the meantime.
Thirdly, in deference to our late colleague, Robert Adley, I ask once again for reassurance from the Secretary of State or the Minister that British Rail's heritage, particularly the museum in York, will be looked after as part of the new responsibilities of the Heritage Department.
With those three points, I commend the Bill to the House and to the country.

Mr. Peter Bottomley: The real issue is how the railways can be competitive with the roads. I think that the House understands that that will be determined by the level of capital investment available to the railways this year, next year and the year after. With the legislation there is little prospect of the private sector bringing in substantial extra funds for three years. I hope that the Government will continue to be flexible in their approach. We have seen in the report of the Select Committee the drop in capital investment over the past two or three years. That needs to be put right fast. The same flexibility as my right hon. Friend the Secretary of State and my hon. Friend the Minister have shown during the passage of the Bill needs to be applied by the Treasury so that the Government can achieve the real aim of a lower subsidy and higher capital investment.
I echo what my hon. Friend the Member for Lewes (Mr. Rathbone) said about Robert Adley. When the Secretary of State said that the Government agreed with four fifths of the report of the Select Committee, that was a tribute to Robert Adley for drawing together the range of opinion within the Select Committee.
The House expects to see further improvements to the Bill in another place, including the incorporation of some of the commitments given to my hon. Friends who have properly raised important issues. Hon. Members who are keen to get the Third Reading over so that they can drive home should realise that the Bill is dedicated to those who use the railways.

Mr. Wilson: I am sure that, even at this late hour, we have all enjoyed the hustings for the chairmanship of the Select Committee on Transport. The legislation with which the Bill is most commonly compared is the Act that introduced the poll tax. There are two reasons for that: first, the intellectual absurdity of the whole exercise, which no serious commentator is prepared to support; secondly, the particularly pertinent fact, of which I give Conservative Members notice, that the legislation will not be the end of the process after which they can keep their heads down and hope that nobody will notice who was responsible for it. We are at the start of a debate that will go on in the country until the general election, as the effects of the legislation become known. That is the reality and that is the similarity. The more that is known of the legislation, the more it will be opposed.
From this day, and especially from the day on which the Bill becomes law—if it does become law—there will be one piece of good news for British Rail. BR will cease to be the whipping-boy for everything that happens on the railways, as it will no longer be responsible. The people who will be responsible for every cut, every fare increase, every breakdown and every loss of service are those who are putting this reckless legislation in place. Every community that depends on the railways understands that.
Notwithstanding the retreats in response to views expressed by hon. Members on both sides of the House, what we have heard today and what we heard in Committee will guarantee a regime of higher fares, fewer Services, an intrinsically less safe railway and massive job losses. All this will have been brought about by a piece of legislation that the public have not asked for and already deeply oppose.
The battle to save our railways will continue. The people who will be held responsible for their fate are Conservative Members, who are putting the Whip before the railway communities.

Mr. Freeman: This Bill will certainly improve the quality and quantity of railway services. By the time of the next election, we shall be happy to stand on our record of improvement. The attitude of the hon. Members for Kingston upon Hull, East (Mr. Prescott) and for Cunninghame, North (Mr. Wilson) throughout the proceedings has been entirely negative. We are happy to stand on our record and I commend the Bill to the House.

Question put, That the Bill be now read the Third time:—

The House divided: Ayes 307, Noes 292.

Division No. 283]
[10.27 pm


AYES


Ainsworth, Peter (East Surrey)
Baker, Rt Hon K. (Mole Valley)


Aitken, Jonathan
Baker, Nicholas (Dorset North)


Alexander, Richard
Baldry, Tony


Alison, Rt Hon Michael (Selby)
Banks, Matthew (Southport)


Amess, David
Banks, Robert (Harrogate)


Ancram, Michael
Bates, Michael


Arbuthnot, James
Batiste, Spencer


Arnold, Jacques (Gravesham)
Bellingham, Henry


Arnold, Sir Thomas (Hazel Grv)
Bendall, Vivian


Ashby, David
Beresford, Sir Paul


Aspinwall, Jack
Biffen, Rt Hon John


Atkins, Robert
Blackburn, Dr John G.


Atkinson, David (Bour'mouth E)
Body, Sir Richard


Atkinson, Peter (Hexham)
Booth, Hartley





Boswell, Tim
Garnier, Edward


Bottomley, Peter (Eltham)
Gill, Christopher


Bottomley, Rt Hon Virginia
Gillan, Cheryl


Bowden, Andrew
Goodlad, Rt Hon Alastair


Bowis, John
Goodson-Wickes, Dr Charles


Boyson, Rt Hon Sir Rhodes
Gorman, Mrs Teresa


Brandreth, Gyles
Gorst, John


Brazier, Julian
Grant, Sir Anthony (Cambs SW)


Bright, Graham
Greenway, Harry (Ealing N)


Brooke, Rt Hon Peter
Greenway, John (Ryedale)


Brown, M. (Brigg & Cl'thorpes)
Griffiths, Peter (Portsmouth, N)


Bruce, Ian (S Dorset)
Grylls, Sir Michael


Budgen, Nicholas
Hague, William


Burns, Simon
Hamilton, Rt Hon Archie (Epsom)


Burt, Alistair
Hamilton, Neil (Tatton)


Butcher, John
Hampson, Dr Keith


Butler, Peter
Hanley, Jeremy


Butterfill, John
Hannam, Sir John


Carlisle, John (Luton North)
Hargreaves, Andrew


Carlisle, Kenneth (Lincoln)
Harris, David


Carrington, Matthew
Haselhurst, Alan


Carttiss, Michael
Hawkins, Nick


Cash, William
Hawksley, Warren


Channon, Rt Hon Paul
Heald, Oliver


Chapman, Sydney
Heath, Rt Hon Sir Edward


Churchill, Mr
Heathcoat-Amory, David


Clappison, James
Hendry, Charles


Clark, Dr Michael (Rochford)
Higgins, Rt Hon Sir Terence L.


Clarke, Rt Hon Kenneth (Ruclif)
Hill, James (Southampton Test)


Clifton-Brown, Geoffrey
Hogg, Rt Hon Douglas (G'tham)


Coe, Sebastian
Horam, John


Congdon, David
Hordern, Rt Hon Sir Peter


Conway, Derek
Howard, Rt Hon Michael


Coombs, Anthony (Wyre For'st)
Howarth, Alan (Strat'rd-on-A)


Coombs, Simon (Swindon)
Howell, Rt Hon David (G'dford)


Cope, Rt Hon Sir John
Howell, Ralph (North Norfolk)


Cormack, Patrick
Hughes Robert G. (Harrow W)


Couchman, James
Hunt, Rt Hon David (Wirral W)


Cran, James
Hunt, Sir John (Ravensbourne)


Currie, Mrs Edwina (S D'by'ire)
Hunter, Andrew


Curry, David (Skipton & Ripon)
Hurd, Rt Hon Douglas


Davies, Quentin (Stamford)
Jack, Michael


Davis, David (Boothferry)
Jackson, Robert (Wantage)


Deva, Nirj Joseph
Jenkin, Bernard


Devlin, Tim
Jessel, Toby


Dickens, Geoffrey
Johnson Smith, Sir Geoffrey


Dicks, Terry
Jones, Gwilym (Cardiff N)


Dorrell, Stephen
Jones, Robert B. (W Hertfdshr)


Douglas-Hamilton, Lord James
Jopling, Rt Hon Michael


Dover, Den
Kellett-Bowman, Dame Elaine


Duncan, Alan
Key, Robert


Duncan-Smith, Iain
Kilfedder, Sir James


Dunn, Bob
King, Rt Hon Tom


Durant, Sir Anthony
Kirkhope, Timothy


Eggar, Tim
Knapman, Roger


Elletson, Harold
Knight, Mrs Angela (Erewash)


Emery, Rt Hon Sir Peter
Knight, Greg (Derby N)


Evans, David (Welwyn Hatfield)
Knight, Dame Jill (Bir'm E'st'n)


Evans, Jonathan (Brecon)
Knox, David


Evans, Nigel (Ribble Valley)
Kynoch, George (Kincardine)


Evans, Roger (Monmouth)
Lait, Mrs Jacqui


Evennett, David
Lang, Rt Hon Ian


Faber, David
Lawrence, Sir Ivan


Fabricant, Michael
Legg, Barry


Fenner, Dame Peggy
Leigh, Edward


Field, Barry (Isle of Wight)
Lennox-Boyd, Mark


Fishburn, Dudley
Lester, Jim (Broxtowe)


Forman, Nigel
Lidington, David


Forsyth, Michael (Stirling)
Lloyd, Peter (Fareham)


Forth, Eric
Luff, Peter


Fowler, Rt Hon Sir Norman
Lyell, Rt Hon Sir Nicholas


Fox, Dr Liam (Woodspring)
MacGregor, Rt Hon John


Fox, Sir Marcus (Shipley)
Maclean, David


Freeman, Roger
McLoughlin, Patrick


French, Douglas
McNair-Wilson, Sir Patrick


Fry, Peter
Madel, David


Gale, Roger
Maitland, Lady Olga


Gallie, Phil
Major, Rt Hon John


Gardiner, Sir George
Malone, Gerald


Garel-Jones, Rt Hon Tristan
Mans, Keith






Marland, Paul
Shersby, Michael


Marlow, Tony
Skeet, Sir Trevor


Marshall, John (Hendon S)
Smith, Sir Dudley (Warwick)


Marshall, Sir Michael (Arundel)
Smith, Tim (Beaconsfield)


Martin, David (Portsmouth S)
Soames, Nicholas


Mates, Michael
Speed, Sir Keith


Mawhinney, Dr Brian
Spencer, Sir Derek


Mayhew, Rt Hon Sir Patrick
Spicer, Sir James (W Dorset)


Mellor, Rt Hon David
Spicer, Michael (S Worcs)


Merchant, Piers
Spink, Dr Robert


Milligan, Stephen
Spring, Richard


Mills, Iain
Sproat, Iain


Mitchell, Andrew (Gedling)
Squire, Robin (Hornchurch)


Mitchell, Sir David (Hants NW)
Steen, Anthony


Moate, Sir Roger
Stephen, Michael


Monro, Sir Hector
Stern, Michael


Montgomery, Sir Fergus
Stewart, Allan


Moss, Malcolm
Streeter, Gary


Needham, Richard
Sumberg, David


Nelson, Anthony
Sweeney, Walter


Neubert, Sir Michael
Sykes, John


Newton, Rt Hon Tony
Tapsell, Sir Peter


Nicholls, Patrick
Taylor, Ian (Esher)


Nicholson, David (Taunton)
Taylor, John M. (Solihull)


Nicholson, Emma (Devon West)
Taylor, Sir Teddy (Southend, E)


Norris, Steve
Temple-Morris, Peter


Onslow, Rt Hon Sir Cranley
Thomason, Roy


Oppenheim, Phillip
Thompson, Sir Donald (C'er V)


Ottaway, Richard
Thompson, Patrick (Norwich N)


Page, Richard
Thornton, Sir Malcolm


Paice, James
Thurnham, Peter


Patnick, Irvine
Townend, John (Bridlington)


Patten, Rt Hon John
Townsend, Cyril D. (Bexl'yh'th)


Pattie, Rt Hon Sir Geoffrey
Tracey, Richard


Pawsey, James
Tredinnick, David


Peacock, Mrs Elizabeth
Trend, Michael


Pickles, Eric
Trotter, Neville


Porter, Barry (Wirral S)
Twinn, Dr Ian


Porter, David (Waveney)
Vaughan, Sir Gerard


Portillo, Rt Hon Michael
Waldegrave, Rt Hon William


Powell, William (Corby)
Walker, Bill (N Tayside)


Rathbone, Tim
Waller, Gary


Redwood, John
Ward, John


Renton, Rt Hon Tim
Wardle, Charles (Bexhill)


Richards, Rod
Waterson, Nigel


Riddick, Graham
Watts, John


Rifkind, Rt Hon. Malcolm
Wells, Bowen


Robathan, Andrew
Wheeler, Rt Hon Sir John


Roberts, Rt Hon Sir Wyn
Whitney, Ray


Robertson, Raymond (Ab'd'n S)
Whittingdale, John


Robinson, Mark (Somerton)
Widdecombe, Ann


Roe, Mrs Marion (Broxbourne)
Wilkinson, John


Rowe, Andrew (Mid Kent)
Willetts, David


Rumbold, Rt Hon Dame Angela
Woltson, Mark


Ryder, Rt Hon Richard
Wood, Timothy


Sackville, Tom
Yeo, Tim


Sainsbury, Rt Hon Tim
Young, Sir George (Acton)


Scott, Rt Hon Nicholas



Shaw, David (Dover)
Tellers for the Ayes:


Shaw, Sir Giles (Pudsey)
Mr. David Lightbown and Mr. Andrew Mai-Kay.


Shephard, Rt Hon Gillian



Shepherd, Colin (Hereford)





NOES


Abbott, Ms Diane
Bayley, Hugh


Adams, Mrs Irene
Beckett, Rt Hon Margaret


Ainger, Nick
Beggs, Roy


Ainsworth, Robert (Cov'try NE)
Beith, Rt Hon A. J.


Allen, Graham
Bell, Stuart


Alton, David
Benn, Rt Hon Tony


Anderson, Donald (Swansea E)
Bennett, Andrew F.


Anderson, Ms Janet (Ros'dale)
Benton, Joe


Armstrong, Hilary
Bermingham, Gerald


Ashdown, Rt Hon Paddy
Berry, Dr. Roger


Ashton, Joe
Betts, Clive


Austin-Walker, John
Blair, Tony


Banks, Tony (Newham NW)
Boateng, Paul


Barnes, Harry
Boyce, Jimmy


Barron, Kevin
Boyes, Roland


Battle, John
Bradley, Keith





Bray, Dr Jeremy
Grant, Bernie (Tottenham)


Brown, Gordon (Dunfermline E)
Griffiths, Peter (Portsmouth, N)


Brown, N. (N'c'tle upon Tyne E)
Griffiths, Win (Bridgend)


Bruce, Malcolm (Gordon)
Grocott, Bruce


Burden, Richard
Gunnell, John


Byers, Stephen
Hain, Peter


Caborn, Richard
Hall, Mike


Callaghan, Jim
Hanson, David


Campbell, Mrs Anne (C'bridge)
Hardy, Peter


Campbell, Menzies (Fife NE)
Harman, Ms Harriet


Campbell, Ronnie (Blyth V)
Harvey, Nick


Campbell-Savours, D. N.
Hattersley, Rt Hon Roy


Canavan, Dennis
Henderson, Doug


Cann, Jamie
Heppell, John


Chisholm, Malcolm
Hill, Keith (Streatham)


Clapham, Michael
Hinchliffe, David


Clark, Dr David (South Shields)
Hoey, Kate


Clarke, Eric (Midlothian)
Hogg, Norman (Cumbernauld)


Clarke, Tom (Monklands W)
Hood, Jimmy


Clelland, David
Hoon, Geoffrey


Clwyd, Mrs Ann
Howarth, George (Knowsley N)


Coffey, Ann
Howells, Dr. Kim (Pontypridd)


Cohen, Harry
Hoyle, Doug


Connarty, Michael
Hughes, Kevin (Doncaster N)


Cook, Robin (Livingston)
Hughes, Robert (Aberdeen N)


Corbett, Robin
Hughes, Roy (Newport E)


Corbyn, Jeremy
Hughes, Simon (Southwark)


Cousins, Jim
Hutton, John


Cox, Tom
Illsley, Eric


Cryer, Bob
Ingram, Adam


Cummings, John
Jackson, Glenda (H'stead)


Cunliffe, Lawrence
Jackson, Helen (Shef'ld, H)


Cunningham, Jim (Covy SE)
Jamieson, David


Cunningham, Rt Hon Dr John
Janner, Greville


Dafis, Cynog
Johnston, Sir Russell


Dalyell, Tarn
Jones, Barry (Alyn and D'side)


Darling, Alistair
Jones, Ieuan Wyn (Ynys Môn)


Davidson, Ian
Jones, Lynne (B'ham S O)


Davies, Bryan (Oldham C'tral)
Jones, Martyn (Clwyd, SW)


Davies, Rt Hon Denzil (Llanelli)
Jowell, Tessa


Davies, Ron (Caerphilly)
Kaufman, Rt Hon Gerald


Davis, Terry (B'ham, H'dge H'I)
Keen, Alan


Denham, John
Kennedy, Charles (Ross.C&S)


Dewar, Donald
Kennedy, Jane (Lpool Brdgn)


Dixon, Don
Khabra, Piara S.


Dobson, Frank
Kilfoyle, Peter


Donohoe, Brian H.
Kirkwood, Archy


Dowd, Jim
Leighton, Ron


Dunnachie, Jimmy
Lestor, Joan (Eccles)


Dunwoody, Mrs Gwyneth
Lewis, Terry


Eagle, Ms Angela
Litherland, Robert


Eastham, Ken
Livingstone, Ken


Enright, Derek
Lloyd, Tony (Stretford)


Etherington, Bill
Llwyd, Elfyn


Evans, John (St Helens N)
Loyden, Eddie


Ewing, Mrs Margaret
Lynne, Ms Liz


Fatchett, Derek
McAllion, John


Faulds, Andrew
McAvoy, Thomas


Field, Frank (Birkenhead)
McCartney, Ian


Fisher, Mark
Macdonald, Calum


Flynn, Paul
McFall, John


Forsythe, Clifford (Antrim S)
Mackinlay, Andrew


Foster, Rt Hon Derek
McLeish, Henry


Foster, Don (Bath)
Maclennan, Robert


Foulkes, George
McMaster, Gordon


Fraser, John
McNamara, Kevin


Fyfe, Maria
Madden, Max


Galbraith, Sam
Maginnis, Ken


Galloway, George
Mahon, Alice


Gapes, Mike
Mallon, Seamus


Garrett, John
Mandelson, Peter


George, Bruce
Marek, Dr John


Gerrard, Neil
Marshall, David (Shettleston)


Gilbert, Rt Hon Dr John
Marshall, Jim (Leicester, S)


Godman, Dr Norman A.
Martlew, Eric


Godsiff, Roger
Maxton, John


Golding, Mrs Llin
Meacher, Michael


Gordon, Mildred
Meale, Alan


Gould, Bryan
Michael, Alun


Graham, Thomas
Michie, Bill (Sheffield Heeley)






Michie, Mrs Ray (Argyll Bute)
Raynstord, Nick


Milburn. Alan
Redmond, Martin


Miller, Andrew
Reid, Dr John


Mitchell, Austin (Gt Grimsby)
Rendel, David


Molyneaux, Rt Hon James
Richardson, Jo


Moonie, Dr Lewis
Robertson, George (Hamilton)


Morgan, Rhodri
Robinson, Geoffrey (Co'try NW)


Morley, Elliot
Robinson, Peter (Belfast E)


Morris, Rt Hon A. (Wy'nshawe)
Roche, Mrs. Barbara


Morris, Estelle (B'ham Yardley)
Rogers, Allan


Morris, Rt Hon J. (Aberavon)
Rooker, Jeff


Mowlam, Marjorie
Rooney, Terry


Mudie, George
Ross, Ernie (Dundee W)


Murphy, Paul
Ross, William (E Londonderry)


Oakes, Rt Hon Gordon
Rowlands, Ted


O'Brien, Michael (N W'kshire)
Ruddock, Joan


O'Brien, William (Normanton)
Salmond, Alex


O'Hara, Edward
Sedgemore, Brian


Olner, William
Sheerman, Barry


O'Neill, Martin
Sheldon, Rt Hon Robert


Orme, Rt Hon Stanley
Shore, Rt Hon Peter


Parry, Robert
Short, Clare


Patchett, Terry
Simpson, Alan


Pendry, Tom
Skinner, Dennis


Pickthall, Colin
Smith, Andrew (Oxford E)


Pike, Peter L.
Smith, C. (Isl'ton S & F'sbury)


Pope, Greg
Smith, Rt Hon John (M'kl'ds E)


Powell, Ray (Ogmore)
Smith, Llew (Blaenau Gwent)


Prentice, Ms Bridget (Lew'm E)
Smyth, Rev Martin (Belfast S)


Prentice, Gordon (Pendle)
Snape, Peter


Prescott, John
Soley, Clive


Primarolo, Dawn
Spearing, Nigel


Purchase, Ken
Spellar, John


Quin, Ms Joyce
Steel, Rt Hon Sir David


Radice, Giles
Steinberg, Gerry


Randall, Stuart
Stevenson, George





Stott, Roger
Watson, Mike


Strang, Dr. Gavin
Wicks, Malcolm


Straw, Jack
Wigley, Dafydd


Taylor, Mrs Ann (Dewsbury)
Williams, Rt Hon Alan (Sw'n W)


Taylor, Rt Hon John D. (Strgfd)
Williams, Alan W (Carmarthen)


Taylor, Matthew (Truro)
Wilson, Brian


Thompson, Jack (Wansbeck)
Winnick, David


Tipping, Paddy
Wise, Audrey


Trimble, David
Worthington, Tony


Tyler, Paul
Wray, Jimmy


Vaz, Keith
Wright, Dr Tony


Walker, Rt Hon Sir Harold
Young, David (Bolton SE)


Wallace, James



Walley, Joan
Tellers for the Noes:


Wardell, Gareth (Gower)
Mr. Jon Owen Jones and Mr. Dennis Turner.


Wareing, Robert N

Question accordingly agreed to.

Bill read the Third time, and passed.

Mr. George Foulkes: On a point of order, Mr. Deputy Speaker. Has Madam Speaker received a request for a statement from the Minister of Agriculture, Fisheries and Food or the Secretary of State for Scotland, both of whom are represented here tonight, following the blockade of the fisheries protection vessel Morven in Girvan harbour by Girvan fishermen who are understandably frustrated by the effect of the tie-up scheme and want the Government to reconsider it urgently? Can we have a statement tomorrow, if not tonight, on this very important matter?

Mr. Deputy Speaker (Mr. Michael Morris): I can report that Madam Speaker has received no such request.

Wool Prices

The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. David Curry): I beg to move,
That the British Wool (Guaranteed Prices) (Revocation) Order 1993 (S.I., 1993, No. 1184), dated 29th April 1993, a copy of which was laid before this House on 30th April, be approved.
I shall deal briefly with the five issues that arise from the statutory instrument: the need for the statutory instrument, the impact on farm incomes, farm welfare, the wool textile industry and the role of the British wool marketing board. They will encompass most of the worries that are likely to be expressed in the House.
The statutory instrument itself is necessary because of the relatively late passage of the Agriculture Bill. The Bill provides for the abolition of the financial guarantee. We had hoped that it would be given Royal Assent by the end of April, before the start of the new clip year. As the House will know, the Bill was "Maastruck" or "Maastricken", whichever is the past participle of Maastricht. The Bill now provides for the end of the guarantee at Royal Assent, whenever that is given.
The statutory instrument revokes the requirement for Ministers to fix annually a guaranteed price for wool. It does not pre-empt the Bill where the substantive issue of the legislative existence of the guarantee is considered. It merely ensures that there will be no rate fixed for this year. That is the constitutional position.
As for farm incomes, it was never the aim of the wool guarantee to offer long-term support to farmers. It was designed to achieve price stabilisation. In the 1960s and 1970s the guarantee provided 10 to 15 per cent. of a sheep farmer's income, but the figure now is less than 5 per cent. The reason for that, of course, is the development of European Community schemes that have pushed money to all producers of sheep, via the ewe premium, and especially to upland producers, via the combination of the ewe premium, the special supplement for upland sheep and the hill livestock compensatory allowances. This year, the support through the ewe premium has been amplified by the currency changes and the depreciation of the pound. The sheep annual premium, plus the HLCAs, is worth £495 million to sheep producers in the United Kingdom—and that is against a background of much healthier prices for the commodity itself. One must not forget that getting a price from the marketplace is as important as receiving a subsidy.
The ending of the guarantee will therefore have a minimal effect on farm incomes. The welfare argument is that farmers will not shear their sheep, but the fact is that in the United Kingdom sheep are reared for meat. The farmer will get his ewe premium, plus his HLCA—farmers in the uplands receive more than £30—and the value of the quota, which is the value of the right to keep the sheep. The few sales that have taken place suggest that that represents a substantial capital value. The farmer will also get the value of the crop of lambs produced by the ewes. In order to qualify for that support and that benefit from the market, a sheep has to be both alive and healthy. If it is not, the farmer will not receive the benefits, so it is not in his economic interest to allow the welfare of the sheep to deteriorate.

Mr. Michael Jopling: Has my hon. Friend examined the problem in the very high hills? I have received a letter on that subject from an extremely prominent farmer in the Lake District—he is a good farmer, too. As my hon. Friend will know, the only sheep that will survive on the very high hills are the Herdwick and the Swaledale, especially the Herdwick. The farmer tells me that, without the guarantee, the value of the wool would pay only 50 per cent. of the cost of shearing and handling the wool. There is a real danger that some farmers on the very high hills—not the good farmers, but those who are in serious difficulties—may be tempted not to incur the expense of shearing the sheep and handling the wool.
Will my hon. Friend give some thought to the possibility of introducing a further order allowing the present system for the Herdwick and the high hill Swaledale sheep to continue for a further year, because of the severe difficulties that the order will cause farmers on the very high hills? Perhaps he would be kind enough to write to me.

Mr. Curry: I hear what, my right hon. Friend says, but he would be the first to recognise that farmers on the very high hills—albeit that they farm Herdwicks—receive significant sums in support. If those sheep are not kept alive and healthy, the support will diminish. It is true, and I acknowledge the fact, that shearing and the other forms of wool production, taken separately from the production of meat and the other purposes of rearing, are non-remunerative activities, because of what has happened on the world market. However, the substance of my case is that that should be set against the value that the farmer receives both from direct support and from the value of the product. Herdwicks now command quite good prices in some continental marketplaces, because of the excellence of their meat, and the wool has become a more marginal factor in the overall value of the commodity to the farmer. Of course I shall write to my right hon. Friend, but he will understand that in promising to do so I cannot make a commitment at the Dispatch Box.
I do not believe that it will be in any farmer's interests not to shear his sheep, even leaving aside any consideration of his preoccupation with welfare. In the worst circumstances—I accept that this would be in the worst circumstances for some maverick farmers—under the Agriculture (Miscellaneous Provisions) Act 1968, it is an offence to cause unnecessary pain or unnecessary distress to livestock and a schedule of penalties is set out.

Dame Elaine Kellett-Bowman: Is this perhaps not the most ideal time at which to introduce the order when there is a huge overhang of wool on the world market?

Mr. Curry: There is a huge overhang of wool on the world market. It would take a sage or a very unwise prophet to forecast when that overhang will disappear. If I were looking for an argument for saying that it was a propitious time, I should argue, first, that there has been a significant increase in Community-directed support to farmers and, secondly, that the depreciation of the pound has added an unlooked-for supplement to that, which has been a bonus—[Interruption.] Let us say the truth. It has been a bonus to farmers. They have benefited directly from it. Market prices have been far more buoyant after a long period in which they were very depressed. In those


circumstances, recognising that wool is a marginal part of the income of sheep farmers, it is not a bad time at which to be doing this.

Mr. Alex Salmond: The Minister seems to be saying that if there had not been the devaluation of sterling he would not be introducing the measure. Is that the case?
Has the Minister any conception of the resentment that his policies are provoking in the interest groups and industries that he is meant to promote? As we have heard, fishermen are being pushed into blockading because of the Minister's policies. Why does he think that he is causing so much resentment among the people who work in the industries for which he is responsible? What is it about his policies or his attitude that is causing so much chaos in farming and in fishing?

Mr. Curry: That is a pretty pathetic intervention. If I am causing resentment among sheep farmers by directing £30·55 in ewe premium, its supplements and the HLCAs to farmers in the most difficult conditions in Britain, I have yet to hear about it. If I have caused resentment even by this measure, I have yet to hear comments from my constituents. I have not had a single letter from my constituency, which is one of the main sheep-producing areas in the country, telling me that this measure is not sensible. The wool marketing board may have thought that there was something fundamentally wrong, but Mr. Alun Evans has not arrived on my doorstep to make representations to me. The hon. Gentleman should have one small star for trying hard, but he needs to try a great deal harder before he gets off early from class.
I am extremely alive to the concerns of the wool textile industry. The industry says that if the farmer shears the sheep, he will either chuck the fleece over the fence or he will sell it away from the board. I recognise that that is a concern. First, let me make it clear that the board keeps its statutory powers as a buyer. Many people have not recognised the fact that we have decided to keep those statutory powers. The board buys and grades the wool, which is an essential job. It does that before selling to the textile industry. That is the difference between it and a body such as the milk marketing board, which buys a raw material and sells it on as lightly transformed, if transformed at all, raw material.
Producers are required to sell to the board. Any farmer selling to anyone other than the board is selling illegally and is subject to action against him by the board, which is enforceable through civil law. The penalty is the fine of the recovery of half the value of the wool sold. The only wool that is not covered by the board is wool that comes from animals that have been slaughtered in slaughterhouses. That remains the case.
The order merely removes the fixing of the guarantee. The only thing that the Agriculture Bill will do, when it eventually becomes law, will be to remove the existence of a guarantee. The statutory power, the obligation to sell through the board and the board's functions remain in place. There is clearly a need for rationalisation and for restructuring if there are gains in efficiency. The board has had management consultancy studies and it has made certain proposals as a consequence. We should have liked to able in the Bill to give the board some assistance by

allowing it to appoint non-executive directors and to widen the scope of its directors. However, those measures were ruled to be outside the scope of the Bill.
We are still ready to give the board all the assistance that we can to address its new situation. I have constant contact with Mr. Alun Evans—we have a strong and sensible working relationship. He recognises that the board is able to face the new challenges and the new situation and that we gave a warning four years ago that this would happen. This has not been sprung on the industry. It has not jumped fully armed from the councils of Government. Four years ago, we gave a warning about it and it has been accepted by the industry.
The position of the industry has changed. The essential support for farmers comes not from wool but from the European Community and the marketplace. That is especially true of the hills, which are strongly represented in my constituency. From the point of view of the farmers and customers, the decision that we have taken should be implemented so that people know where they stand. It is right and necessary and I commend the order to the House.

Mr. D. N. Campbell-Savours: We have heard a most unconvincing speech from the Minister. His responses to Conservative Members were less than satisfactory. This is a shabby and sad little order which arises out of a grubby little deal that was done between Treasury Ministers and Agriculture Ministers. Agriculture Ministers needed money to fund the further development and expansion of environmentally sensitive areas and have taken money away from the wool guarantee.
At no stage was the effect of this order properly measured on, first, domestic wool production and exports from the United Kingdom; secondly, employment in the wool processing industry in the United Kingdom; thirdly, the balance of payments; fourthly, the maintenance of quality standards of wool in the United Kingdom; and fifthly, and most importantly, the whole question of animal welfare. I shall go into animal welfare in detail this evening.
The wool industry is to be Gummered or, as they say in the slaughtering industry, effectively knackered because that is what will happen to it in the coming years. Let me explain what the problem is, in case the Minister does not understand. At present, the guaranteed price for wool is 117p per kilo. The farmers' share of that is 90p per kilo and the rest goes to the wool board to cover marketing, handling and storage costs. For nearly 40 years, the price of wool has rarely been below the guaranteed price. Until 1989, the overall cost to the taxpayer was almost nothing. Indeed, in 1988, the industry felt so confident about its future that it was prepared to accept the phasing out of the guarantee. In 1990, the international wool market totally collapsed. The effect of the collapse was to trigger the Government's guarantee with a taxpayer contribution and the price paid to the farmer was maintained at 96p per kilo in the 1989–90 year. Let there be no doubt in the minds of hon. Members that, if the guarantee is abolished tonight, the price to the farmer will drop from more than 90p per kilo to only 40p per kilo. That is the difference to the farmer.

Mr. Tony Marlow: If the hon. Gentleman is right, it is a difference of 50p per kilo. How many kilos are there in an average fleece? What is the price of lamb this year compared with the price last year?

Mr. Campbell-Savours: There are 2 kilos in an average fleece and the price of lamb this year is higher than last year. The critical question is: will low-paid sheep farmers continue to shear their sheep? What are the consequences of failing to shear? The answer is that some sheep farmers will no longer shear because they will say that it is no longer profitable. Indeed, it will be unprofitable. What is the evidence for that?
Average shearing costs are 27·5p per kilo. The British wool marketing board's calculations show that for certain breeds—the right hon. Member for Westmorland and Lonsdale (Mr. Jopling) referred to this—the costs incurred in shearing sheep will exceed the price received for the wool when it is sold to the board. In the case of Swaledales and dark and light Herdwicks, farmers will lose money if they shear. In the case of Herdwicks, they will lose 50p per animal. Several other breeds are on the margin of profitability.
So what are the consequences of a reduction in the wool clip? I have here a letter from a company called D. B. Holdsworth Ltd., which will be known to Ministers as one of the most important wool merchants in the United Kingdom. What it says about the consequences on jobs of the reduction in the clip is interesting:
In the scouring and combing sectors, there are some 2,500 jobs which are directly at risk. Approximately 50 to 55 per cent. of the British wool clip is exported direct—largely in this form. There are a further 21,000 jobs in wool textiles, which would also be directly affected, mainly in carpet spinning … Any reduction in the British wool clip would undoubtedly result in the increase, by importation, of wools from overseas—mainly New Zealand. Value added at present to British wool which is in the form of yarn and cloth would be lost.
On marketing the company says:
Prior to the advent of the British Wool Marketing Board, there were 270 merchants collecting wool. The clip was badly graded,"—
a function of the British wool marketing board, as the Minister said—
or not graded at all. Contamination and damage was prevalent and wool left on the farm (in some cases for years).
Are Ministers prepared to accept that we should go back to the bad old days before the introduction of the wool guarantee?

Mr. Curry: The hon. Gentleman persists in debating as if farmers produced sheep for wool and nothing else. But he knows that that is not true. Farmers produce sheep for meat and the wool is a by-product of that. Therefore, even though the shearing of the wool might not be economic in present circumstances, it is still in the farmer's interest to keep his animals healthy and alive because he receives a large degree of support for them. What is more, he receives a good market price for them. It is entirely counter-productive and self-destructive for the farmer not to shear his sheep. It is not an isolated sector. It is part of the production of that animal.

Mr. Campbell-Savours: The Minister is right. Yes, the farmer will get his price on the market. But the point is that the incentive to shear is lost. If he believes that he can still get the price on the market without shearing, he will proceed to do so.

Mr. Marlow: Has the hon. Gentleman ever kept sheep? If he kept sheep, would he shear them or not?

Mr. Campbell-Savours: Of course I would shear them. But I remember a Conservative Member of Parliament who could not even look after his sheep and was taken to court and prosecuted. He paid £1,000 in court costs and £1,500 in fines. So let us not talk about constituency of approach by people in the United Kingdom on such matters.
The issue of jobs was referred to by D. B. Holdsworth Ltd. Let us consider the position in the Minister's constituency. In Skipton and Ripon two large companies are involved in wool processing. One is Hayfield Textiles, which has 235 full-time employees. It is a large user of British wool in its spinning processes. It has several thousand customers in the United Kingdom and it exports British wool products all over the world. It has markets for British wool in the United States of America, Scandinavia, the far east, Australia and Japan. Their export markets are threatened by any reduction in the clip. Indeed, the introduction of a new product line using naturally coloured wool from hardy varieties—the very varieties to which the hon. Gentleman was referring—is directly threatened as the clip will no longer be profitable to shear.

Dame Elaine Kellett-Bowman: The hon. Gentleman is doing farmers a grave injustice. I do not know a single farmer who would allow his sheep to suffer by not being sheared. None of the ones round my way would allow that.

Mr. Campbell-Savours: I hope that the hon. Lady is right, as indeed does the whole House. But the reality is that some farmers will not shear. We will wait and see what happens and when it happens I will be able to draw it to the attention of the hon. Lady.
Another company, Gaskell Carpets, in the Minister's contituency employs 50 full-time staff to make a 100 per cent. British wool product, a very fine product indeed. It produces only from British wool and I argue that its supplies are at risk if there is any reduction in the clip.
Does the Minister wish to contest what I am saying?

Mr. Curry: Yes, absolutely; I contest it totally. The hon. Gentleman has not taken into consideration the fact that sheep numbers in the United Kingdom are a great deal higher than they were four or five years ago. Even if what he forecasts were to happen, we have still got more sheep and would still get a bigger clip than we did four or five years ago. But it will not happen.

Mr. Campbell-Savours: Has the Minister consulted firms in his constituency? If so, what was the result of the consultation? What did they say when he asked them what their views were about the ending of this arrangement? Did they express concern? Does he want me to give way again?

Mr. Curry: If they have such concerns, they see me in my surgery or write to me.

Mr. Campbell-Savours: A £700 million export business in the United Kingdom is threatened as a result of the withdrawal. I am not saying that it will be destroyed, but it will be undermined. The continuity of supply of British wool, particularly certain varieties, to British wool processors will be affected.

Mr. Jopling: I am extremely grateful to the hon. Gentleman, who is my neighbour in the Lake District, but


he is getting on to a rather bad point. I would guess that the firms that he is mentioning will be laughing all the way to the bank as a result of this order, because it will mean that the wool clip will remain much the same as it has been. All farmers will do as he said that they would do—as did my hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman). They will continue to clip their sheep whether or not it is profitable. That will mean that the firms to which he referred will have a bonanza, because they will get nearly the same amount of wool, but much cheaper. So they will make big profits.
I wish that the hon. Gentleman would confine his remarks to the farmers, because they are the ones who will lose out on this.

Mr. Campbell-Savours: The hon. Gentleman would do well to consult the National Farmers Union in Cumbria, because it agrees with what I am saying. His constituency is covered by that branch of the NFU.
If the trade implications are damaging, the animal welfare implications are appalling. I have a very interesting letter here from an organisation called the National Office of Animal Health Ltd. I understand that this organisation is the trade association of the animal medicines industry. This is what it has to say on the whole question of shearing:
We are extremely concerned about press speculation that, due to the low price of wool, farmers will be tempted not to shear their sheep this summer. This prospect offers a considerable threat to the welfare of individual sheep and the health of the nation's flock.
Ministers gasp when I read this. It is not me speaking, it is not the Labour party speaking, it is the National Office of Animal Health which specialises in these matters and is dealing with medicines in this area.
The letter continues:
failure to remove the wool creates a number of serious problems. Sheep, particularly in rough terrain, can be 'cast', falling and unable to rise, because of the weight of the fleece eventually resulting in starvation and death. The presence of a heavy … fleece in hot summers can cause direct stress to the sheep. The fleece as it becomes old, dirty and matted, forms an ideal habitat for a wide range of external parasites which can infest the fleece and burrow into the animals flesh. Blow fly, lice and keds can all flourish. Apart from regular dipping, shearing offers the best protection against summer parasite attack. Parasite attack can damage the hide as well as the fleece … Sheep scab, sadly no longer a notifiable disease in Great Britain, has exploded throughout the British sheep population. The British Leather Confederation report 10 per cent. of hides showing evidence of scab attack … Not only does shearing remove the cover under which scab and other parasites can operate, but the act of gathering in flocks and shearing means that every sheep has a thorough inspection every year. Furthermore, the presence of an old, matted fleece prevents proper penetration of dip".
Ministers and Government Back Benchers may laugh, but that is the view expressed.

Mr. Geoffrey Clifton-Brown: Will the hon. Gentleman give way?

Mr. Campbell-Savours: No. The hon. Gentleman is a potato producer and does not rear sheep.
That is the view of the animal welfare lobby, the trade association to the animal medicines industry, the British Wool Federation and a number of other bodies which regard themselves as experts. The only people who do not agree with the argument are Ministers, who do not want to

fork out taxpayers' money to maintain the guarantee into the future. [Interruption.] It may well be a good enough position for Ministers, but we are concerned about the implications for jobs, for exports and for animal welfare.

Mr. Clifton-Brown: Will the hon. Gentleman give way?

Mr. Campbell-Savours: I promise that I will give way on the amendment to the Agriculture Bill, if it is selected, in three weeks' time when we are discussing the wool guarantee.
Finally, let me say a few words about the wool marketing board. It recognised that the writing was on the wall in 1988 when it accepted the principle of the guarantee being phased out. It undertook a major rationalisation pre-empting what is about to happen. It cut its marketing, grading, advertising and promotion costs. It reduced its work force by 30 per cent. and the number of depots from 29 to 22 over a three-year period. It generated a capital reserve of £10 million which, unfortunately, was not sufficient to see it through a very difficult period with a huge overhang in the international wool market, a major overhang certainly in Australia where 4 million bales of wool which cannot be sold are gathering dust. It pleaded with the Government for a phased period for the withdrawal of the guarantee, first over a three-year period, then over a two-year period. Next week I shall plead on behalf of the wool marketing board for a one-year period on the back of a particular amendment, if it is selected.
When the board failed in all those areas, it came back to ask for Government support with marketing costs for wool because there are problems bringing wool in from marginal producers in parts of Scotland and Wales, and smaller producers are worried because in the new circumstances it will be difficult to fund the collection of wool. It has received no response or help from the Government. It has made every effort in the matter and it is clear, from what the Minister said and from the comments of the hon. Member for Lancaster (Dame E. Kellett-Bowman) and others, that there is concern in the north of England about the way in which it has been treated.
The industry should be helped, not punished. I invite hon. Members in all parts of the House to vote against the measure in protection of the British wool industry.

Mrs. Elizabeth Peacock: We may have somewhat differing views about the order. As chairman of the all-party wool textile group, it would be remiss of me not to put forward some views.
The Minister will recall that when I spoke about the guaranteed wool price and other issues on Second Reading of the Agriculture Bill [Lords] on 23 March last I made certain statements. I make no apology for reiterating them tonight. As I recall, he was not listening too well when I adduced them originally, although he assured me that he read the Official Report of my speech later.
I said that one aspect of the Bill would have a serious effect on the wool industry and producers and would, in turn, affect our textile industry. The main purpose of the guaranteed price has been to give stability to wool producers and, as we have heard, it has done that for over 40 years. The cost to Government has been very small and that stability continued until world wool prices collapsed in 1990. As I said on Second Reading:


The stability created by the guaranteed price has allowed the British wool clip to improve in quality and image, and turn itself into an internationally recognised fibre. There are licensees all over the world, and there is representation in Japan, which is now one of the biggest consumers of British wool. The existence of the guranteed price has helped to develop an efficient structure for the collection, distribution and promotion of British wool. That structure is the envy of many European countries and it was the basis of the system now operating in South Africa. The guaranteed price has served producers in the less-favoured and remote areas of this country particularly well".
There is concern in the board about collecting small parcels of clip in remote areas. It is thought that it will not be profitable for collection under the new system. I said:
The existence of the guaranteed price has been of great value in preserving the environment and countryside".—[Official Report, 23 March 1993; Vol. 221, c. 830.]
So we are not talking about the industry.
I listened carefully to the Minister saying how well off sheep farmers were. Undoubtedly, those on hill farms, particularly in his constituency, which I know well, are receiving lots of money. But a sheep farmer who I know in Bedfordshire tells me that he receives less for a whole lamb, plus its fleece, than I pay for a leg of lamb at the butchers. That is a difficult argument to defend.

Mr. Curry: I do not want to quarrel with my hon. Friend. I did not say that sheep farmers were very well off. I said that there was a significant flow of Community support to them, that the quota was bringing a capital value and that the value of cropping the lambs was significantly better than it had been for a number of years. I accept that it is from a low base. I simply say that the trend has been positive and we are grateful that that is the case because it needed to be positive after what happened in previous years.

Mrs. Peacock: I accept that the trend is more positive than it has been, but my hon. Friend will recall that I asked him for an assurance on Second Reading that the issue would be examined thoroughly in Committee. When I read the Official Report of the Committee proceedings for the morning of 11 May, when the matter was discussed, I was sorry to note that only the hon. Members for North Cornwall (Mr. Tyler) and for Workington (Mr. Campbell-Savours) and the Minster took part. That was not much of a discussion
At about the time when that discussion was taking place, hon. Members were receiving letters from Donald Holdsworth of D. B. Holdsworth. He is the chairman of the British Wool Federation and he wrote to several hon. Members as follows:
We agreed to the ending of the guaranteed price in 1988 but since then the picture has changed dramatically (which could not possibly have been envisaged …) We are convinced that it is in the interests of both producers and the Wool Textile Industry to have the guaranteed price phased out over three years rather than ended so abruptly in these difficult circumstances.
So it was agreed, in better times, that the guaranteed price should be phased out; the chairman merely asks for a reconsideration now.
The situation—the world glut, the marketing of wool, and the circumstances facing those who depend on their wool cheque—has changed dramatically. I insist that some farmers need their wool cheque, just as they need the money from milk and meat. I ask the Minister carefully to consider the changes that have occurred. To say that a

handful of farmers may be producing wool, but most are producing meat, and wool is a by-product of that industry I suggest is insulting to many of our wool farmers—

Mr. Curry: It was a pure statement of fact. How can my hon. Friend possibly deny it? Most production, in hills and lowland, is of meat. Wool is a by-product. Good luck to farmers: I hope that they make as much money as they can from this, but it is not their main source of income.

Mrs. Peacock: I hear what the Minister says, but to suggest that only a handful of farmers have an interest in wool is an insult to those who do have such an interest. They have supported much of our wool textile industry. Their wool may not go into our fine cloth, because we import the wool for that, but it certainly goes into our carpet yarn. The Minister may know more about sheep than I do, but I certainly know a little more than he does about carpet yarn. He might allow hon. Members some knowledge of industries. I may not chase sheep around the hills, but I do know a little about this subject.
I hope that the Minister will tell us how he sees the future not just of sheep on, the hills, but of our wool textile industry, which is very important to many areas of the country.

Mr. Paul Tyler: I am delighted to follow the hon. Member for Batley and Spen (Mrs. Peacock), but I should like to take her argument a stage further.
There is no immediate pressure to remove this guarantee. We do not have to do it because of the European Community. We are not forced into it by the GATT negotiations. It is entirely down to the Minister's timetable and the Minister's motives.
Still less is there any pressure from the industry. The British Wool Federation and the board agreed that in due course it might be desirable to remove the guarantee. That was agreed in 1988 when, as the hon. Member for Workington (Mr. Campbell-Savours) said, there was a rough equilibrium in the world market—hence, the transition would have been easy. Not so today, when the amount paid to producers would be halved. The Minister says that his farmers are cheerful at the prospect, but I notice that a large number of Conservative Members look far from cheerful. I suspect that that has as much to do with the timing as with the order itself.
The question that the board and the federation are asking is: why now? Why no transition? Why no two or three-year transitional period? What is the hurry? Clause 50 of the Agriculture Bill provides for the Minister to take the necessary steps to abolish the guaranteed price. Why do we have to jump ahead of that? Why, on the eve of the clip season, should we push ahead with this proposal? The world market, as we know, means that, if we go straight into it, the price per kilo for the farmer will be reduced from 90p to 40p. Many hon. Members may be surprised to hear that, when added up, that is quite a large sum: £26 million will be taken out of the income of the agricultural community. According to the Minister's own figures, the very modest increases that have taken place among the hill livestock farms have not extended to all those in the sheep farming sector; in Scotland in particular, those incomes have fallen for the second year running.
I spent some time with my sheep farmers in the Hallworthy market in Cornwall on Friday. Of course, it is true that the proportion of their farm income is less than it was five or 10 years ago, but that does not mean that it is totally worthless; I suspect that some hon. Members, if they suddenly found that 10 per cent. of their income were removed, would still feel that that was an appreciable sum. [Interruption.] Hon. Members may not realise that the average figure, which is about 5 per cent., is not the figure that I am quoting. For a hill farm, it is often a larger percentage of the total income. That is why last year—as we saw from the Minister's own figures—particularly in the less favoured areas, many sheep farmers' figures showed a larger percentage.

Mr. Curry: It must be a lesser proportion in the hills. In the hills, a farmer in a particularly disadvantaged area with a hardy breed receives £30·55; a farmer in another area, who does not receive the same benefit, receives £17·48. By definition, as the price of wool is constant, the amount must be less in the hills than in the lowlands.

Mr. Tyler: Using the Minister's own figures for last year, there was a reduction in Scotland for the second year running among hill livestock farmers, whereas in England and Wales there was only a modest increase. In those circumstances, it must surely be clear that removing part of the income will mean a substantial figure which will affect those concerned.
The right hon. Member for Westmorland and Lonsdale (Mr. Jopling)—who has now left the Chamber—made it clear in an intervention that it is the farmers who will lose out disproportionately. Some farmers, in some parts of the country, are clearly benefiting from the devaluation of the green currency. It may well be that in some areas—where Conservative Members represent comparatively large farms—this will not be a major problem; but for Liberal Democrat Members who represent a large number of smaller sheep farmers, it will represent a substantial cut in their incomes. Whether it is 5 or 10 per cent. is neither here nor there for those who are already making very small profits, or none at all. [Interruption.] The Minister says the average is 5 per cent., and I take his word for it. I am going by the average figure. I believe that many of those farming in marginal areas with marginal returns cannot yet take any more knocks than they have taken already.
Only a few months ago, many hon. Members who were present for the debate represented those affected by the cuts in the HLCAs. Surely the argument then was that, when a marginally profitable level already operates, every cut will be damaging. That surely is why this is the wrong time and the target is wrong.
I believe that the Minister should be listening to the views of the British Wool Federation and the National Farmers Union. Their view is clear: they believe that the order improperly anticipates Royal Assent of the Agriculture Bill. Indeed, it improperly anticipates our discussion of clause 50. The National Farmers Union said:
In view of these extraordinary factors, the NFU, together with the British Wool Marketing Board, believe clause 50 of the Agriculture Bill should be amended to provide for the wool guarantee to be continued until 1995 (by which time the wool market is expected to be in better balance), or phased out over two years as was discussed with MAFF officials in early 1992.

The Minister said that there had been no such discussions or representations. The NFU also said:
At minimum, the wool guarantee should continue for a further full clip year, that is until 30 April 1994, in order to avoid disruption to marketing and possible differential treatment between farmers.
The Minister has told us that all is sweetness and light, that everybody has agreed, that it is simple and that we can move quickly to the new circumstances. That is not the burden of the representations that have been made by all sectors of the industry. If the order is approved, the Minister owes it to the House and to the industry to guarantee that the shortfall in income, particularly for those at marginal levels of profitability—

Mr. Marlow: rose

Mr. Tyler: I am about to conclude. The hon. Gentleman can make his own speech in a moment.
If the Minister wants to ensure that his assurances are not just paper assurances, he must guarantee that all the other forms of support to which he has referred, including HLCAs, are increased to compensate for the removal of this important element in the total income of hill and other sheep farmers.

Mr. Dafydd Wigley: I want to say a word on behalf of the poor, benighted sheep farmers. My county of Gwynedd has more than 2 million sheep, and it has had a rough time in recent years. In addition to the other economic problems that hon. Members from sheep-raising areas will be aware of, we have had the acute experience of Chernobyl, which continues to affect 350 farms and 250,000 sheep in my part of Wales. Sheep farmers can well do without any further knock. This knock is unnecessary and could have been avoided, at least for this year. The Minister should take to heart the representations of the NFU, the Farmers Union of Wales and others for phasing. There is no need to move with such speed. I appeal to him, even at this late stage, to consider the matter again.
The most recent figures which I have for farm incomes for hill and upland livestock farms are for 1991. They show that in Wales no fewer than 65 per cent. of hill and upland livestock farms had a net income of less than £5,000. That compares with 30 per cent. in Scotland. Those people are working on the margins and they can ill afford any reduction. The reduction in the wool guarantee will make a difference. I do not pretend that it will make a massive difference, taking the industry as a whole, but for those on the margins it could make the difference between surviving and not doing so. I calculate that in my county we would lose about £1 million.
In 1991, the year which I quoted for net farm incomes, the guarantee was 130p per kg and the average price for wool at auction was 61p. Now it is well below that. A difference of 50p could have an enormous effect on the farmers. Therefore, in Wales, with 11 million sheep, compared to 20 million in England and about 10 million in Scotland, it will make a difference to those who are most vulnerable. Even at this late stage I appeal to the Minister to heed the voice of the industry and at the very least to give a 12-month period of grace.

Sir Giles Shaw: I venture with some unease into this debate amongst professionals who are well aware of what happens on upland sheep farms. First, I support my hon. Friend the Member for Batley and Spen (Mrs. Peacock) as a member of the all-party wool textile group. Indeed, I still have some textile interests in my constituency. I know some scourers as well, and I know a little about the importance of the English clip. I accept the main thrust of my hon. Friend's argument, which is that farmers rear sheep primarily for meat and that that is their main source of income. Not long ago the price of lamb in particular was at rock bottom. The industry—particularly the hill farmers—was in real difficulty. It is not a stable industry: there is much ebb and flow, due partly to consumer demand and partly to price.
Those of us who have the blessing of visiting uplands fairly often recognise the real need to maintain the upland farmer. The valleys and dales of Yorkshire must be properly farmed—worked in a way that is suitable only for the terrain over which the farmers have to earn their living. It is a pretty fragile industry. It is all very well to look at other sectors of agriculture that have a real prospect of generating income in most conditions. The upland sheep farmer operates between fragile margins of success and failure. I beg my hon. Friend to recognise that fact. If, in due course, there is to be a significant difference in the incomes of hill sheep farmers, the scheme might be reconstituted. For many years, it has been of extreme value to these people.
My second point relates to rare breeds. There has been a major effort to sustain the Herdwick, which at one point was in grave danger of running out. We have the Swaledale as well, but the Herdwick is a particular breed from the high Yorkshire dales and the lakeland fells, and it would be a real tragedy if it were lost as a result of this measure.
The hon. Member for Workington (Mr. Campbell-Savours), who has a robust interest in this matter, spoke with his usual tremendous grasp. I do not intend to enter into the debate about what happens if sheep are not clipped. I accept that there is many a tick between the fleece and the clip. I do not expect an answer from my hon. Friend at this stage, but I ask him to bear in mind the fact that, with regard to protection of the upland environment and of the upland breeds—quite apart from the importance of maintaining this fragile industry—what is being done is not necessarily very welcome or of huge significance in terms of agricultural support. However, it represents a very present help in trouble. And the troubles could well return.

Mr. Campbell-Savours: I should like to say a few words before the Minister replies. Perhaps he would care to listen to the questions that I am about to put.
Is he prepared to monitor what happens over the next 12 months so that it may be established whether there has been a decline in the British clip? At this stage, Ministers are not prepared to accept that my proposition has any merit, and there is not much sympathy among Conservative Members for the case that I have made. However, there is a view—and it is held not just by my hon. Friends and myself—that there will be a decline in the British clip, and that this will have implications for the wool textile industry in the United Kingdom. Hon.

Members may shake their heads, but I can assure them that this view is held. I ask merely that Ministers keep an eye on the situation to ensure that if there is a clip reduction consideration will be given to the introduction of some arrangement to prevent long-term consequences for British industry.
We shall divide the House on this matter. We shall wish to win, but if we are defeated Ministers should monitor the situation and consider what measures might be taken to deal with any damage.

The Parliamentary Under-Secretary of State for Scotland (Sir Hector Monro): I am pleased to respond to some of the points raised tonight. We heard an astonishing speech from the hon. Member for Workington (Mr. Campbell-Savours). The one good point that he made was so obvious that it hardly needed to be made—that the situation should be monitored. Agriculture Ministers monitor all the time everything that is happening. Effective organisations participated in the hill farming review, and our close relationship with the farmers' unions of all countries enables us to know what is happening.
We are not in any way winding up the British wool marketing board—certainly not. We are dealing only with the scheme. I give warm thanks to the board's chairman and members, who have done exceptionally well. I particularly want to mention Joe Raine, who will be well known to my right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling), and who has done so much in the north of England over such a long time.
The board has done outstandingly good work in its 40 year's existence. I declare an interest: I have been a customer of the board for all those 40 years. There have been five years to plan for the Government's decision, and in that time the board had an opportunity to prepare its financial situation, build up its reserves, which now stand at some £10 million, and cushion the effect of the price drop that will occur this year, being the difference between last year's guaranteed price and this year's market price.
The price schedule issued last week shows that the difference between the market and guaranteed price will be in the region of 50 per cent. This year, farmers will receive the 50 per cent. that was held back last year, so there will not be the dramatic price drop that the hon. Member for Workington and others suggested.
Over the past five years, the board has worked on minimising the effect of the change on farmers and on customers. It has certainly taken its duties very seriously.
The hon. Member for Workington devoted most of his speech to animal welfare. Any right hon. or hon. Member who has, like myself, been involved in sheep farming for many years will know that the hon. Gentleman's fears and criticisms are wholly unfounded. If he really believes that the average farmer will allow his flock to go unclippped in the year, he is miles from reality.
The hon. Gentleman might equally have said last year, when we stopped compulsory dipping, that farmers would not dip to save money—but they all dipped. Dipping is important in respect of not only scab but fly, and clipping and dipping—as hill and lowland farmers well know—are an essential part of sheep husbandry.

Mr. Elliot Morley: Is the Minister aware that, sadly, prosecutions for cruelty to


farm animals increased last year? Although we would not claim that such farmers are in the majority, unfortunately a minority mistreat farm animals. Given marginal incomes, the pressure on that minority will increase. Does not the Minister accept that that real risk ought to be taken seriously?

Sir Hector Monro: Everything is taken seriously, but one must look at risks at face value. The hon. Gentleman and the hon. Member for Workington totally exaggerate the order's likely repercussions. It is part of normal sheep husbandry to clip and to dip. Those operations will continue as before.
Having been a member of the all-party wool textile group, I appreciate how much my hon. Friend the Member for Batley and Spen (Mrs. Peacock) and her colleagues have done to promote the textile industry. I live in a textile area, so I appreciate the importance of the wool clip to the textile industry. Mills or brokers in my part of the world have not complained that our proposals will have a detrimental effect on the wool and textile industry.
Nor, indeed, have I received complaints from fellmongers, who are an important part of the industry. I believe, as my hon. Friend the Minister of State said in opening, that there will be ample wool supplies—and possibly at a lower cost than in the past—and that the industry will not be harmed by the order.

Mr. Campbell-Savours: The Minister said that he has received no complaints from people in the wool processing industry. That is my understanding of what he said. Did he consult them? Were the Government's proposals circularised? Have not they protested to the Ministry? Have not they written letters and sought meetings with Ministers to object? Is he saying that this is a figment of our imagination? Is he saying that people in the industry have misled Labour Members by suggesting that they have been making representations on these issues? Is it all a figment of our imagination?

Sir Hector Monro: Yes, it must be. I check my daily correspondence very carefully. I have had no letters from the textile or fellmongering industries.

Mrs. Peacock: I have listened carefully to my hon. Friend the Under-Secretary. All I can say is that everybody in the industry wrote to the chairman of the all-party wool textile group instead. I assure my hon. Friend that I have received plenty of letters and I took deputations to see my hon. Friend the Minister of State. They obviously sent their letters to me rather than to my hon. Friend the Under-Secretary.

Sir Hector Monro: If my hon. Friend has had voluminous correspondence, it would be nice if she were to pass it on to me so that I can deal with it. We are most concerned for the wool and textile industry, especially the hosiery industry, which has had such a struggle in recent years. I am not criticising. I am saying that the order will not make the situation any worse. Indeed, it may help because prices may be lower.
The hon. Member for North Cornwall (Mr. Tyler) was concerned about timing. His forecast of farm incomes is, frankly, not true. For the past two years, hill farm incomes in Scotland have increased by 40 per cent. That is agreed by the hill farming review and there is no doubt about it.

We have been over the figures umpteen times. The figures have been produced by academics throughout the United Kingdom, and the statement of fact is reflected in the sheep annual premium, the hill livestock commensatory allowance, the suckler cow subsidy and all the other assets that have been devoted to helping hill farming.
The hon. Member for Caernarfon (Mr. Wigley) saw the position sensibly and he wished it to be kept in proportion. We shall monitor the situation.
My hon. Friend the Member for Pudsey (Sir G. Shaw) said that it is important to maintain upland farms, and I could not agree more. That is exactly why we have increased subsidies for hill farmers in recent years. Under the sheep annual premium, the HLCAs, the suckler cow subsidy and environmentally sensitive areas assistance will be given to environmentally friendly ways of farming.
We are certainly looking after the hill farming sector, especially where wool is involved. There is no reason to feel that the change under the order will have a serious impact on farming incomes. We are convinced that it will be as low as 5 per cent. or less. We can get it right in conjunction with the British wool marketing board. I know that there are difficulties because of world wool prices, but it is possible that they will improve. It is the board's leadership on quality and its determination constantly to raise standards which will provide the likely route to success. I commend the motion to the House.

Question put:—

The House divided: Ayes 189, Noes 150.

Division No. 284]
[11.49 pm


AYES


Aitken, Jonathan
Cope, Rt Hon Sir John


Alexander, Richard
Couchman, James


Alison, Rt Hon Michael (Selby)
Cran, James


Amess, David
Curry, David (Skipton & Ripon)


Arbuthnot, James
Davies, Quentin (Stamford)


Arnold, Jacques (Gravesham)
Davis, David (Boothferry)


Arnold, Sir Thomas (Hazel Grv)
Day, Stephen


Aspinwall, Jack
Dorrell, Stephen


Atkinson, David (Bour'mouth E)
Douglas-Hamilton, Lord James


Atkinson, Peter (Hexham)
Dover, Den


Baker, Rt Hon K. (Mole Valley)
Duncan, Alan


Baker, Nicholas (Dorset North)
Durant, Sir Anthony


Banks, Matthew (Southport)
Eggar, Tim


Banks, Robert (Harrogate)
Elletson, Harold


Bates, Michael
Emery, Rt Hon Sir Peter


Batiste, Spencer
Evans, Jonathan (Brecon)


Bellingham, Henry
Evans, Roger (Monmouth)


Beresford, Sir Paul
Faber, David


Bitten, Rt Hon John
Fabricant, Michael


Boswell, Tim
Forman, Nigel


Bottomley, Peter (Eltham)
Forsyth, Michael (Stirling)


Bowden, Andrew
Fox, Dr Liam (Woodspring)


Bowis, John
Freeman, Roger


Brandreth, Gyles
French, Douglas


Brazier, Julian
Gallie, Phil


Bright, Graham
Gardiner, Sir George


Brooke, Rt Hon Peter
Gill, Christopher


Brown, M. (Brigg & Cl'thorpes)
Gillan, Cheryl


Budgen, Nicholas
Greenway, Harry (Ealing N)


Burt, Alistair
Griffiths, Peter (Portsmouth, N)


Butler, Peter
Grylls, Sir Michael


Carlisle, Kenneth (Lincoln)
Hague, William


Carrington, Matthew
Hamilton, Neil (Tatton)


Carttiss, Michael
Hampson, Dr Keith


Channon, Rt Hon Paul
Hargreaves, Andrew


Clappison, James
Harris, David


Clark, Dr Michael (Rochford)
Hawksley, Warren


Clifton-Brown, Geoffrey
Hayes, Jerry


Congdon, David
Heald, Oliver


Coombs, Anthony (Wyre For'st)
Heathcoat-Amory, David


Coombs, Simon (Swindon)
Hendry, Charles






Hicks, Robert
Portillo, Rt Hon Michael


Horam, John
Powell, William (Corby)


Hordern, Rt Hon Sir Peter
Rathbone, Tim


Howarth, Alan (Strat'rd-on-A)
Redwood, John


Howell, Rt Hon David (G'dford)
Richards, Rod


Hunt, Rt Hon David (Wirral W)
Riddick, Graham


Hunt, Sir John (Ravensbourne)
Robertson, Raymond (Ab'd'n S)


Hurd, Rt Hon Douglas
Rowe, Andrew (Mid Kent)


Jack, Michael
Ryder, Rt Hon Richard


Jenkin, Bernard
Shaw, David (Dover)


Jones, Gwilym (Cardiff N)
Shaw, Sir Giles (Pudsey)


Jones, Robert B. (W Hertfdshr)
Shepherd, Colin (Hereford)


Kellett-Bowman, Dame Elaine
Sims, Roger


King, Rt Hon Tom
Smith, Sir Dudley (Warwick)


Kirkhope, Timothy
Soames, Nicholas


Knapman, Roger
Spencer, Sir Derek


Knight, Mrs Angela (Erewash)
Spicer, Sir James (W Dorset)


Knight, Greg (Derby N)
Spink, Dr Robert


Kynoch, George (Kincardine)
Spring, Richard


Lait, Mrs Jacqui
Sproat, Iain


Legg, Barry
Squire, Robin (Hornchurch)


Leigh, Edward
Stanley, Rt Hon Sir John


Lidington, David
Stephen, Michael


Lightbown, David
Stern, Michael


Lloyd, Peter (Fareham)
Sweeney, Walter


Lord, Michael
Sykes, John


Luff, Peter
Taylor, Ian (Esher)


Lyell, Rt Hon Sir Nicholas
Temple-Morris, Peter


MacKay, Andrew
Thomason, Roy


Maitland, Lady Olga
Thompson, Sir Donald (C'er V)


Malone, Gerald
Thompson, Patrick (Norwich N)


Mans, Keith
Thornton, Sir Malcolm


Marland, Paul
Thurnham, Peter


Marlow, Tony
Townend, John (Bridlington)


Martin, David (Portsmouth S)
Townsend, Cyril D. (Bexl'yh'th)


Mawhinney, Dr Brian
Tredinnick, David


Merchant, Piers
Trend, Michael


Mills, Iain
Trotter, Neville


Mitchell, Andrew (Gedling)
Twinn, Dr Ian


Mitchell, Sir David (Hants NW)
Walden, George


Monro, Sir Hector
Waller, Gary


Montgomery, Sir Fergus
Ward, John


Moss, Malcolm
Wardle, Charles (Bexhill)


Nelson, Anthony
Watts, John


Neubert, Sir Michael
Wells, Bowen


Nicholson, David (Taunton)
Wheeler, Rt Hon Sir John


Nicholson, Emma (Devon West)
Whitney, Ray


Norris, Steve
Widdecombe, Ann


Onslow, Rt Hon Sir Cranley
Wilkinson, John


Oppenheim, Phillip
Willetts, David


Ottaway, Richard
Wood, Timothy


Page, Richard



Paice, James
Tellers for the Ayes:


Patnick, Irvine
Mr. Sydney Chapman, and Mr. Robert G. Hughes.


Pickles, Eric



Porter, David (Waveney)





NOES


Abbott, Ms Diane
Boyce, Jimmy


Adams, Mrs Irene
Bradley, Keith


Ainger, Nick
Brown, N. (N'c'tle upon Tyne E)


Ainsworth, Robert (Cov'try NE)
Bruce, Malcolm (Gordon)


Alton, David
Burden, Richard


Barnes, Harry
Byers, Stephen


Battle, John
Callaghan, Jim


Bayley, Hugh
Campbell, Mrs Anne (C'bridge)


Beckett, Rt Hon Margaret
Campbell, Menzies (Fife NE)


Beggs, Roy
Campbell-Savours, D. N.


Beith, Rt Hon A. J.
Carlile, Alexander (Montgomry)


Benton, Joe
Chisholm, Malcolm


Betts, Clive
Clarke, Eric (Midlothian)





Clelland, David
Macdonald, Calum


Clwyd, Mrs Ann
McLeish, Henry


Connarty, Michael
Maclennan, Robert


Cryer, Bob
McMaster, Gordon


Cunliffe, Lawrence
Mahon, Alice


Cunningham, Jim (Covy SE)
Marshall, David (Shettleston)


Cunningham, Rt Hon Dr John
Martin, Michael J. (Springburn)


Dafis, Cynog
Martlew, Eric


Dalyell, Tam
Meale, Alan


Darling, Alistair
Michael, Alun


Davidson, Ian
Michie, Bill (Sheffield Heeley)


Davies, Ron (Caerphilly)
Michie, Mrs Ray (Argyll Bute)


Davis, Terry (B'ham, H'dge H'I)
Milburn, Alan


Dewar, Donald
Moonie, Dr Lewis


Dixon, Don
Morgan, Rhodri


Dowd, Jim
Morley, Elliot


Eagle, Ms Angela
Morris, Estelle (B'ham Yardley)


Eastham, Ken
Mowlam, Marjorie


Enright, Derek
Murphy, Paul


Etherington, Bill
O'Brien, William (Normanton)


Evans, John (St Helens N)
Olner, William


Ewing, Mrs Margaret
Patchett, Terry


Flynn, Paul
Pickthall, Colin


Foster, Rt Hon Derek
Pike, Peter L.


Foster, Don (Bath)
Pope, Greg


Foulkes, George
Powell, Ray (Ogmore)


Fyfe, Maria
Prentice, Gordon (Pendle)


Galloway, George
Primarolo, Dawn


Godman, Dr Norman A.
Purchase, Ken


Golding, Mrs Llin
Raynsford, Nick


Grant, Bernie (Tottenham)
Reid, Dr John


Griffiths, Win (Bridgend)
Rendel, David


Hall, Mike
Robertson, George (Hamilton)


Hanson, David
Rooney, Terry


Hardy, Peter
Ross, William (E Londonderry)


Harman, Ms Harriet
Ruddock, Joan


Harvey, Nick
Salmond, Alex


Henderson, Doug
Simpson, Alan


Heppell, John
Skinner, Dennis


Hinchliffe, David
Smith, Andrew (Oxford E)


Hoon, Geoffrey
Smith, C. (Isl'ton S & F'sbury)


Howarth, George (Knowsley N)
Spearing, Nigel


Hughes, Kevin (Doncaster N)
Steel, Rt Hon Sir David


Hughes, Simon (Southwark)
Steinberg, Gerry


Ingram, Adam
Stevenson, George


Jackson, Helen (Shef'ld, H)
Strang, Dr. Gavin


Jones, Barry (Alyn and D'side)
Taylor, Matthew (Truro)


Jones, Ieuan Wyn (Ynys Môn)
Turner, Dennis


Jones, Jon Owen (Cardiff C)
Tyler, Paul


Jones, Lynne (B'ham S O)
Wallace, James


Jones, Nigel (Cheltenham)
Warden, Gareth (Gower)


Jowell, Tessa
Wareing, Robert N


Keen, Alan
Wicks, Malcolm


Kennedy, Charles (Ross, C&S)
Wigley, Dafydd


Kilfoyle, Peter
Williams, Alan W (Carmarthen)


Kinnock, Rt Hon Neil (Islwyn)
Wilson, Brian


Kirkwood, Archy
Wise, Audrey


Lewis, Terry
Worthington, Tony


Livingstone, Ken
Wray, Jimmy


Lloyd, Tony (Stretford)
Young, David (Bolton SE)


Llwyd, Elfyn



Loyden, Eddie
Tellers for the Noes:


McAvoy, Thomas
Mr. Eric Illsley and Mr. Jack Thompson.


McCartney, Ian

Question accordingly agreed to.

Resolved,
That the British Wool (Guaranteed Prices) (Revocation) Order 1993 (S.I., 1993, No. 1184), dated 29th April 1993, a copy of which was laid before this House on 30th April, be approved.

PETITIONS

Section 11 Funding

12 midnight

Mr. Tony Lloyd: It gives me considerable pleasure to present this petition to the House on behalf of my constituents in Stretford, especially those associated with primary and secondary schools who face the withdrawal of section 11 funding and who are concerned about the impact of that withdrawal on the quality and quantity of education in those hard-pressed parts of the borough of Trafford.
The petition says:
the withdrawal of section 11 funding will have a serious impact on the quality of education and opportunities for young people. Wherefore your petitioners pray that your honourable house reconsider this decision.
I make it clear that I fully support the petition.

To lie upon the Table.

Sub-Post Offices

Mr. Elliot Morley: I present a petition on behalf of the people of Glanford and Scunthorpe in relation to-the threat to sub-post offices and to the right of people to choose how they receive their benefits, whether through a bank account, a building society account or, as many of my constituents want, across the counter of their local post offices.
The petition has been raised in sub-post offices all over my constituency: in villages such as Broughton and Bottesford and in urban areas such as Lincoln gardens, Henderson avenue and Ashby. A whole range of sub-post offices shares this concern.
The petition says:
To the Honourable the Commons of the United Kingdom of Great Britain and Northern Ireland assembled. The Humble Petition of the people of Glanford and Scunthorpe sheweth that the government is proposing to change the method of paying pensions and other benefits to Automated Credit Transfer without adequate choice, and we the undersigned vigorously protest against this proposal.
Wherefore your Petitioners pray that your honourable House will urge the Secretary of State for Social Security to ensure that people will retain the clear right to cash their benefits at Post Offices.
And your Petitioners, as in duty bound, will ever pray.
Assurances have been given, but assurances were given in the election and were broken. I hope that the Government take note of the petition.

To lie upon the Table.

Wakefield (Assisted Area Status)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lightbown.]

Mr. David Hinchliffe: I have lost count of the number of occasions on which my three hon. Friends and I who represent the four Wakefield district constituencies have secured Adjournment debates to express our concern about the impact of Government economic and industrial policy on employment in our area. Our constituents in the Wakefield, Dewsbury, Castleford and Pontefract travel-to-work areas have seen during the 1980s and the early 1990s the systematic destruction of what has for generations been the economic base of the area—the coal industry. In our localities, we have experienced the wiping out of traditional male employment on an unprecedented scale. One needs to live in the area, as I and my three hon. Friends do, fully to understand the human implications of the changes.
My purpose in securing tonight's debate is further to press the Government to face their responsibilities in ensuring that our constituents in Wakefield can look forward to much better employment prospects than is, frankly, the case at present. It is to argue that the same Government who led the way in destroying the prospects of so many in our area have a duty to recognise the difficulties that the Wakefield district faces and ensure that the two travel-to-work areas involved are accorded assisted area status as a matter of urgency.
The Minister will say that our area, like many others, has been a victim of a wide recession, whether it be the last recession or the previous one over which the Government presided. I have spent considerable time in my constituency speaking to businesses involved in a wide range of activities. I am consistently told that the lack of any sort of economic or industrial strategy causes them the most difficulty. I have lost track of the number of times that managers in what is left of the mining engineering sector—people who are often politically sympathetic to the Government—have decried the complete absence of any form of energy policy.
Less than a fortnight ago, I was told by one local company with an interest in rail freight that it knew that the Government intended to privatise the railways. But what was their wider strategy for transport? People who are intimately involved in the industry simply could not detect one. The lack of any overall industrial strategy has meant that local companies producing for the export market have felt undermined by the Government. I have pressed this point on several occasions at Trade and Industry questions.
Producers of leading edge mining engineering technology with huge export potential find that the process of marketing their products is hampered by a British Government destroying the main marketing point—British pits—while the wider economic consequences are obvious from the balance of trade. In Wakefield, we pick up the pieces at the local level in terms of the impact on jobs and family prosperity.
The Minister is fully aware of the job losses that have occurred in the Wakefield district recently because of the coal closure programme. My constituency has no pits left and the decline of coal has had a huge impact on related industries such as engineering. We have seen major


closures such as British Ropes, Wooltex and Gullick Pitcraft, and companies such as British Jeffery Diamond have dramatically reduced their work forces. Numerous smaller producers for the coal industry have also shed jobs.
There must be serious doubts about the prospects of the remaining companies in the light of the implications of the DTI White Paper on the coal industry. The proposed closure shortly of Sharlston colliery, with a direct loss of nearly 700 more mining jobs, will add further to this spiral of decline. Undoubtedly, my hon. Friend the Member for Normanton (Mr. O'Brien) will refer to that closure if he catches your eye, Mr. Deputy Speaker, and my hon. Friend the Member for Hemsworth (Mr. Enright) will probably detail the impact of the closure of Grimethorpe colliery on the Wakefield area if he gets an opportunity to speak in this debate.
Their comments will reinforce representations made by Wakefield metropolitan district council to the Department of Trade and Industry about the changes that have occurred in Wakefield since the local authority made its original submissions for consideration during the review of assisted area status. In a letter dated 7 April 1992 to the Department, the leader of the local authority estimated that, with the closure of Sharlston and Grimethorpe, together with job losses at Kellingley, Prince of Wales and Frickley collieries, no fewer than 1,250 miners resident in Wakefield have subsequently lost their jobs.
It will be fairly obvious to the Minister that the marked decline in traditionally male employment, such as mining and engineering, has meant that women have increasingly become the breadwinners in many local families. But particularly alarming in recent weeks has been the announcement of proposals to close two major companies in Wakefield which employ many women in their work forces.
The announcement of the closure of Lofthouse Foods in the constituency of my hon. Friend the Member for Normanton was made on 23 April with a loss of about 1,300 jobs. A fortnight later, on 7 May, it was announced that the Lyons Bakeries plant in my constituency was to close, with the loss of about 500 jobs. Such closures would have a devastating effect on any area, but against a background of thousands of recent job losses in the coal and engineering industries, there is now extreme concern in Wakefield about the economic and social implications of the employment situation.
The local authority is to be commended on its efforts to attract industry to the district. It has had some notable successes with Coca-Cola, Schweppes, Pioneer and others, but it recognises that, despite the arrival in Wakefield of several new companies, we are continuing to experience an alarming decline in employment opportunities.
The Wakefield Europort project has been seen by the Wakefield metropolitan district council as a basis for the generation of about 6,500 new jobs in the district. As the Minister will be aware, public funding is being sought from both EC and United Kingdom sources as a catalyst for the development of the project. The project site is in the constituency of my hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse), who has worked long and hard to secure its completion.
The proposed Europort consists of a terminal, one of nine Euroterminals in the United Kingdom, and a one-stop European freight centre for businesses in the Yorkshire and Humberside region. The promoters of the

scheme believe that better transport links to the continent will help to encourage foreign investment. The proximity of the site to the motorway network will ensure minimal transhipment problems and easy access by road to other parts of the region. The Europort will enhance export opportunities for regional firms by providing greater speed and efficiency of distribution. It will encourage locally based firms to reinvest in the region in the knowledge that European markets are easily accessible.
Port Wakefield is a public-private sector development which would clearly bring significant benefit to the whole region, as well as to the immediate Wakefield district. However, in view of the current economic climate, there is serious anxiety that this vital project may not proceed. Several grant sources—European regional development fund and derelict land grant—have been explored jointly with the Department of the Environment to assist in the implementation of the project. It is hoped that the grants will be forthcoming.
However, the factor that would be of most benefit would be the awarding of assisted areas status to the Castleford and Pontefract travel-to-work area. As well as offering incentives to inward investors, designation as an intermediate development area would assist with infrastructure elements of the scheme.
My hon. Friends and I who represent the Wakefield constituencies have felt aggrieved for several years that the district's problems have not received proper Government recognition. The unemployment statistics have consistently shown Wakefield to have levels of unemployment well above that in areas which receive assistance.
I mentioned at the beginning of my speech the human implications of Wakefield's employment problems. As my hon. Friends and I come from and live in the Wakefield district, many of the statistics relate to people known to us personally—neighbours, friends and sometimes relatives. I cannot emphasise too strongly the profound anger that I feel meeting every day when I am at home men of my age and younger whose jobs have disappeared and who believe, perhaps rightly, that they have little prospect of getting back into regular employment. The Government have a duty to assist such men to regain their self-respect and return to regular work.
I am grateful for the opportunity to raise these points tonight. I hope that the Minister will recognise the strength of Wakefield's case.

Mr. William O'Brien: I join my hon. Friend the Member for Wakefield (Mr. Hinchliffe) in emphasising the need for assistance to be given to the Wakefield area in total. That assistance is made more necessary because in the past four weeks it has become clear that 2,000 jobs will be lost in my constituency. The Sharlston colliery will close with the loss of 700 jobs, and Lofthouse Foods will close shortly, with the loss of 1,300 jobs. These are just two examples of the devastation that my constituency is suffering. In addition to those 2,000 jobs, there are a further 2,000 jobs in the location of the two major factories I have mentioned that will be lost.
That is the significance of this appeal tonight for some assistance to be given to the Wakefield area.
I am disappointed that the Minister for Industry is not present. It was important that he be here, because it was he who, on 30 October last year, sent a letter to the


Opposition Front-Bench spokesman on industry saying that RECHAR money would not be available to mining areas. RECHAR money would have meant that £140 million could have been available for the development of mining areas. It is therefore disappointing that the Minister is not here to say why we have not had that money over the past three years.
The allocation was for the three years up to 1993. We feel that we have been betrayed, because money that should have been available to help the development of the mining areas, in particular the Wakefield and district area, has been denied to us. If the Minister were here, he would have to explain why we were not allowed to have our money.
I want to re-emphasise the need for some assistance to the area. We have been pleading for assisted area status. A deputation to meet the Minister, including members of the local authority and the four Members for the Wakefield area, made clear in November last year the need for assisted area status to help us over the unemployment problem that was looming then and has since become worse because of the closure of Lofthouse Foods, which was unannounced and a surprise to everyone in the area.
I put it to the Minister that it is important that some assistance be given by way of assisted area status to the Wakefield area. I join my colleagues in asking that there be no further delay. The information is now available; the 1991 census figures are there. The question of assisted area status was first brought forward in June 1990, and the time has come for decisions to be made. I hope that Wakefield will be included in those decisions and will rejoin the map of areas enjoying assisted area status.

Mr. Derek Enright: My hon. Friends have put the case admirably for assisted area status, and I will point out briefly some of the reasons why, in Hemsworth constituency particularly, we need that.
I will start by detailing the unemployment levels in the various wards: ward 11, 14 per cent.; ward 12, 15·1 per cent.; ward 18, 11·5 per cent.—that is in Ackworth, where it is principally professional people now going out of employment; ward 19, 17 per cent.; and ward 20, 20·3 per cent.
Those are appalling figures, but they existed before the closure of Sharlston and Grimethorpe. In the villages of Havercroft, South Heindley and Ryhill now, male unemployment is above 40 per cent. There are no official statistics, but unofficially, that is the best practical estimate we can make. Hemsworth is a microcosm of what has happened in the Wakefield area.
A mere 10 years ago, Hemsworth had more pits than any other constituency in the entire United Kingdom, including Scotland and Wales. Today it has one, Frickley, which is being rapidly run down and currently under threat in spite of the promises of the President of the Board of Trade.
As the Minister knows, these figures underestimate the real unemployment figure. I am not trying to make a political point; the Minister knows that some of the miners who are out of work, although they want to work, are not included in the statistics. That creates a serious social situation, particularly since the few jobs that exist in my

constituency are extremely poorly paid. More than 50 per cent. of the jobs that were available were paying under £3 per hour.
No one can envisage living on £120 a week. It is appalling. We are being left with more cheap jobs because firms such as Thyssen and Felkirk Engineers, which are dependent on supplying the mining industry, are having to run down.
British Coal Enterprise Ltd. is our great hope, but, in our experience, it comes in, stays for six weeks and quietly folds up its tent and goes out into the night. It has remarkably little impact upon employment.
The number of free school meals in the primary schools in my constituency is going up rapidly, and in more than five of them the figure is over 50 per cent. That is an alarming statistic.
The derelict land is totally unsuitable for new industry. We are left with dereliction and the threat of opencast mining in our only piece of open countryside, Wintersett. As the local authority, quite understandably, has not been able to keep up with repairs, the housing conditions are appalling.
I invite the Minister to Come to the Scotch estate, which is an example of a dilapidated estate which has basically good housing but which would be improved enormously by assisted area status. It would give us the opportunity to uplift socially and allow people to live in good conditions.
In conclusion, assisted area status would stop the downward spiral, and I beseech the Minister to see to it that we get it.

The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Neil Hamilton): I congratulate the hon. Member for Wakefield (Mr. Hinchliffe) on initiating the debate, and the hon. Members for Normanton (Mr. O'Brien) and for Hemsworth (Mr. Enright) on their contributions. I am sorry that the hon. Member for Normanton feels that I am an inadequate substitute for my right hon. Friend the Minister for Industry, but I am a northern Member of Parliament, and as a Minister in the Department I am collectively responsible for the decisions we take, so I hope that my answers to the points that have been made in the debate will have equal authority.
I am also grateful to the hon. Member for Makerfield (Mr. McCartney) for being here this evening to give me moral support as a Member for the other side of the Pennines where my constituency is situated. He came to see me before Christmas with a delegation from his own local authority to plead the case for assisted area status, and he did it extremely eloquently.
I am fully aware of the strength of feeling that exists in Wakefield and the importance that is attached to the application for assisted area status. The case has been made forcibly tonight and in written submissions, and at a meeting with my noble Friend Baroness Denton of Wakefield on 4 November last, when a delegation from Wakefield, including the local Members, made a clear presentation of all the key issues.
As hon. Members know, the current review of the assisted areas map was announced last June, and the criteria on which the review is based were set out in a consultation document. We invited interested parties to submit their views. During the consultation period, over 1,500 written representations have been received. My


ministerial colleagues and I at the Department of Trade and Industry have met more than 50 delegations, in addition to delegations that have been seen by Ministers at the Scottish Office and Welsh Office. So the needs and circumstances of all areas have been carefully considered in the review.
As part of that process, we have continued to monitor the economic situation in Wakefield, and the results of the review will be announced as soon as possible, following the necessary clearance by the European Commission. As the House will understand, I cannot anticipate those decisions tonight, so I am afraid that I am not in a position to give any advance indication about whether Wakefield will succeed in obtaining assisted area status.
I fully appreciate the difficulties encountered by businesses in Wakefield, as the hon. Gentleman pointed out, in the last two to three years. No region or sub-region—indeed, no industrialised nation—has been insulated from recessionary pressures, regardless of the political complexion of the Governments concerned. These have led to some painful rationalisations and restructuring across all business sectors.
The recession has lasted longer than expected, but I believe that all the ingredients for recovery are now in place—low inflation, lower interest rates, a competitive exchange rate, rising productivity and slower wage growth. So although we have undoubtedly been through a bruising period, I believe that the economic prospects, for Wakefield in particular, are better. They cannot be viewed in isolation from the prospects of the United Kingdom economy as a whole, and there are clear signs of a resumption in economic growth suggesting a sustainable recovery this year.
For example, total output has been rising for nearly a year and non-oil output rose by 0·5 per cent. in the first quarter of 1993; manufacturing output is 2 per cent. higher in the first quarter than in 1992; retail sales are at a record level in the three months to April, up 3·25 per cent. on a year earlier; productivity and exports are at record levels and are growing strongly; seasonally adjusted unemploy-ment is down for the third consecutive month in April; and consumers and business men are now much more optimistic about the prospects for the economy. So, although I would not seek to disguise the scale of the problem, there are causes for optimism.
The final point I cited—about the growth in economic optimism—is very much supported by the latest business surveys conducted in West Yorkshire. The regional CBI, the Leeds chamber and the mid-Yorkshire chamber all report strengthening business confidence and increased expectations of gradual and sustainable growth.
The speed and impact will inevitably vary across sectors and between areas, but it is encouraging that there are definite signs of increasing investment, particularly in the manufacturing sector. Investment intentions among Yorkshire and Humberside companies are among the strongest in the United Kingdom, according to the most recent CBI survey.
The recent decrease in regional unemployment is particularly welcome, but it is probably too soon to be absolutely sure of a clear downward trend, and there are distressing cases such as those raised by, in particular, the hon. Member for Normanton, of closures that have been announced recently.
But the Yorkshire and Humberside seasonally adjusted rate of unemployment of 10·5 per cent. in April is down

0·2 per cent. on January 1993 and is now only 0·1 per cent. above the national average compared with 0·3 per cent. a year ago. I agree that unemployment is still too high, and we look forward to a sustained fall. In Wakefield, the unemployment rate in April fell for the third consecutive month, and that is a welcome sign.

Mr. William O'Brien: rose—

Mr. Hamilton: I will not give way. I have only a few minutes in which to reply—

Mr. O'Brien: rose—

Mr. Hamilton: No, I will not give way. There were three speeches in the debate and only a few minutes remain, and I am anxious to give as full a response as I can.
The hon. Gentleman has referred to recent job losses in Wakefield, including the British Coal redundancies at Kellingley and Sharlston and the closures at Northern Foods and Lyons Bakeries. I can assure him that these have been taken into consideration as part of the assisted area map review process.
I recognise that AA status is important to Wakefield, but it would be misleading to suggest that its benefits would be the only source of Government assistance. That is plainly not the case. In response to British Coal redundancies at Sharlston and Kellingley we have already introduced the following local package of measures as part of an overall national regeneration programme totalling £200 million. First, the DTI will extend the regional investment grants to 12 wards in Wakefield and Castleford. This was announced on 13 May and will encourage small firms employing fewer than 25 people to invest in new plant and equipment.
This represents an important boost to the small business sector in Wakefield and complements support for new product development under the related regional innovation grant scheme which was extended to Wakefield in May 1992.
English Estates has prepared a £4 million programme of industrial and commercial development for Wakefield. The Wakefield TEC and the Employment Service will receive an additional £1·87 million in respect of Sharlston and £1·3 million for Kellingley, shared with the North Yorkshire TEC, for a combination of training and business support. In addition, Wakefield council has been invited to bid to the Department of the Environment-administered coalfield areas fund for projects designed to alleviate problems caused by the Sharlston closure.
The hon. Gentleman referred also to the Port Wakefield project, involving AMEC and a potential 7,000 new jobs as part of a rail freight terminal development. Government Departments are currently in discussion with AMEC over the details of the scheme and the possibilities for public financial sector support.
These measures are additional to the significant amount of public investment being made in Wakefield through both United Kingdom Government and European mechanisms. For example, since 1990–91 Wakefield council has reclaimed almost 200 acres of derelict land, largely former colliery sites, as part of a 1,500 acre programme, and has received £3·5 million in grant from the Department of the Environment. Over £6 million business support funding under existing European programmes, including RECHAR, has been offered, largely utilising effective local partnerships of regeneration


agencies. Examples include a small business equity fund through British Coal Enterprise, the Ferrybridge resource centre and the Wakefield business and technical information centre. There has also been over £10 million infrastructure support under the mid-Yorkshire opera-tional programme in the last two financial years. Wakefield TEC annual training and enterprise budgets are in excess of £12 million a year.
I believe that these measures will provide a significant contribution to the future prosperity of Wakefield, whether or not the district is successful in obtaining assisted area status. That alone cannot be a panacea for all the district's problems, which will need to be tackled on a wider front through a continuing and extended partnership of all the relevant regeneration agencies, including the DTI, other Government Departments, the local authority, the TEC, and the private sector.
We do not underestimate the current difficulties facing coalfield areas like Wakefield. That is why the £200 million regeneration package was devised and the assisted area map review has been delayed to take account of the coal review. I know that hon. Members would like a decision as soon as possible, and as soon as the EC aspects of the decision have been cleared, we will announce it at the earliest possible opportunity.
We must be careful not to over-emphasise these current economic problems, to the detriment of the area. Wakefield has a number of significant strengths which will be crucial to its continuing diversification and regeneration and, in particular, it enjoys an excellent location alongside the M62/M1 motorway network, first class communications and a loyal and industrious work force. That is why it has already been successful in attracting several significant inward investment projects, including Pioneer and Coca-Cola, and a host of other smaller projects.

Question put and agreed to.

Adjourned accordingly at twenty-seven minutes to One o'clock.